When considering a loss projection analysis for a client with a recent acquisition, it is best to include as much of the recent history (previous 5-6 years) for the acquired entity as possible. The key point is that the history must include both loss and exposure data. If exact exposure data is not available, a reasonable approximation will do so long as exposures are included for the acquired entity for any year where losses are included.
When preparing the loss projection, you can blend the data by policy year (include a combined amount of losses and exposures for each year), or simply input data for the parent and acquired into separate policy years. Either way, the system-weighted average pure loss rate on Loss Forecaster's Pure Loss Rate screen should be an appropriate projected loss rate for the combined entity.
For more info, see the related FAQ:
My client has acquired another company. Would separate or combined loss projections be best?
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