How is the Company RBC% derived?

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How is the Company RBC% derived?

The idea is to blend two pieces of information: the industry-wide baseline and how this particular company compares to that baseline. The industry reserve RBC% represents a market-wide benchmark of reserve risk. The industry reserve RBC% adjusted for company experience tailors that benchmark to the specific company by reflecting its historical reserve development and risk profile. By taking the straight average of these two numbers, you give equal weight to the industry baseline and the company-specific adjustment. This creates a company RBC% that balancedly incorporates both broad sector experience and the company’s own experience, rather than over- or under-weighting either factor. The other options would either add quantities together, overweight company size, or rely on geography, which aren’t the intended equal-blend approach.

The idea is to blend two pieces of information: the industry-wide baseline and how this particular company compares to that baseline. The industry reserve RBC% represents a market-wide benchmark of reserve risk. The industry reserve RBC% adjusted for company experience tailors that benchmark to the specific company by reflecting its historical reserve development and risk profile.

By taking the straight average of these two numbers, you give equal weight to the industry baseline and the company-specific adjustment. This creates a company RBC% that balancedly incorporates both broad sector experience and the company’s own experience, rather than over- or under-weighting either factor. The other options would either add quantities together, overweight company size, or rely on geography, which aren’t the intended equal-blend approach.

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