The most likely exam problem from the Teng and Perkins paper will focus on estimating the premium asset, using the method from the exhibits in the appendix to the paper. Know well the method used to solve the following practice problem. The detailed solution, with commentary, is in the Teng and Perkins study aid. As you work through the practice problem, be sure to identify the columns here with the columns in the Teng and Perkins exhibits. All the input columns are provided here; the remaining columns from the Teng and Perkins exhibits are derived figures.
You are estimating the accrued retrospective premium asset as of December 31, 2001. You have experience for policy years 1994 through 2000, as shown below.
| Policy Periods | Expected Future Loss Emergence | Premiums Booked from Prior Adjustment | Premiums Booked as of Dec 2001 |
| 1994.1 to 1994.4 | 1,000 | 230,000 | 30,000 |
| 1995.1 to 1995.4 | 5,000 | 250,000 | 250,500 |
| 1996.1 to 1996.4 | 10,000 | 260,000 | 261,000 |
| 1997.1 to 1997.4 | 20,000 | 270,000 | 275,000 |
| 1998.1 to 1998.4 | 30,000 | 280,000 | 285,000 |
| 1999.1 to 1999.4 | 50,000 | 300,000 | 305,000 |
| 2000.1 to 2001.4 | 350,000 | 0 | 415,000 |
You are given the following PDLD ratios and loss emergence percentages:
| Retro Adjustment Periods | Selected PDLD Ratio | Percent Loss Emergence |
| First | 1.600 | 70.0% |
| Second | 0.750 | 12.0% |
| Third | 0.500 | 8.0% |
| Fourth | 0.450 | 4.0% |
| Fifth | 0.400 | 3.0% |
| Sixth | 0.300 | 2.0% |
| Subsequent | 0.000 | 1.0% |
What is the estimated accrued retrospective premium asset as of December 31, 2001?