[[Actuarial Notes Wiki|Wiki]] / [[Exam 5 (CAS)]] / **Roll Forward Analysis** ## Definition ==Roll Forward Analysis== is a reconciliation technique that tracks the movement of loss reserves from one valuation date to the next, explaining changes through payments, new incurred, and development. ## Formula ``` Ending Reserves = Beginning Reserves + New Claims Incurred - Payments Made +/- Development on Prior Years ``` ## Example ``` Reserve Roll Forward (12/31/2023 to 12/31/2024): Beginning reserves (12/31/2023): $10,000,000 Plus: 2024 AY incurred: $2,500,000 Less: Payments in 2024: ($3,000,000) Plus: Development on prior years: $300,000 Ending reserves (12/31/2024): $9,800,000 Development: Prior AY 2023 estimate: $9,000,000 Current AY 2023 estimate: $9,300,000 Development: $300,000 (3.3%) ``` ## Uses - Validate reserve movements - Explain reserve changes - Identify development - Monitor reserve adequacy ## Related Concepts - [[Actual vs Expected Analysis#Definition]] - [[Reserve Adequacy#Definition]] ## References - Friedland, Chapter 11