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Old 10-07-2018, 03:01 PM
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SirActSci SirActSci is offline
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Default STAM TIA D.1.3 Example (Partial Credibility)

The material says Pc is M (1-Z) + Z(X bar) however the example uses MZ +(1-Z)(X bar)

This is the example with 15,000,000 and 10,000,000

Please clarify
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Old 10-07-2018, 03:40 PM
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I don't have the example in front of me (as I don't have TIA for STAM), but the formula is Z*(X bar) + (1-Z)(M) with M equal to the mean of the distribution and X bar equal to the historical mean.
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Old 10-07-2018, 04:28 PM
daaaave daaaave is offline
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In the example, our data point was 15,000,000 in observed losses. That is our X-bar, and when we do Z * 15,000,000, we are doing Z * X-bar. The 10,000,000 of the prior estimate is our M, so the (1-Z) * 10,000,000 is (1-Z) * M. That is, we are finding Z * X-bar + (1-Z) * M.
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Old 10-07-2018, 04:59 PM
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Thank you for your replies.

I understand now.
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