My client has acquired another company. Would separate or combined loss projections be best?

Generally speaking, we recommend combining the loss information from each acquired entity with that of the acquiring entity when creating a loss projection analysis in Loss Forecaster.  However, there are a few potential factors to be aware of when compiling the data:

• To achieve accurate results you should combine the exposure information from each acquired entity.  Otherwise, the pure loss rates that Loss Forecaster calculates will be based on a comparison of loss experience from all entities and exposure information from just the acquiring entity.

• Potentially there can be issues with differing policy periods between each entity.  For example, the acquiring entity may have policy periods based on calendar year, whereas one of the acquired entities may have policies that incept 6/1.  In this scenario, we recommend summarizing the loss and exposure data using a single, consistent policy period.  Typically, this matches the period of the acquiring entity.  In this example, you would summarize the loss data for each entity based on calendar year before combining.

• Finally, ensure the fields from each loss run have consistent definitions of loss.  For example, a loss run for one entity may have incurred and paid loss fields which are net of recoveries, but another may use incurred and paid loss fields gross of recoveries.  With this in mind, we recommend a quick review of each loss run that you'll be using for the analysis - just so you have a clear picture of what each loss run contains and how the incurred and paid losses are defined.