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Foundations of Casualty Actuarial Science
Which can be expressed as L = EP
The relationship can be expressed as :
G = EF
L
=F
P
Substituting for L and G in the equation of R , we get
R = EP [1+(F/P)]
E(1-V-G)
R= P+F
1-V-Q
11. Concept of Target Loss Ratio
1-V-Q
T=
1+G
Where
T = target loss ratio
V = premium-related expense factor
Q = profit and contingencies factor
G = ratio of non-premium-related expenses to losses
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