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Ep = Expected Primary Loss
Ae = Actual Excess Loss
Ee = Expected Excess Loss
B = Ballast Value
w = Excess Losses Weighting Factor

Note , the denominator of this formula equals E + B

Where
E = Excess Losses

This formula is also written as
M = Ap +C + (Ae X w )
Ep +C + (Ee X w)

Where C is a different stabilizing value than B. C is a
function of w, B and Ee.

M =1 + CD

Where CD is the experience rating (credit/debit)

17. Variation in claim frequency
Var (N) = E[Var(N /)] + VarE(N / )

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