4. (5 points) You are given the following information: Cumulative Loss Payments Through Development Year Accident Earned Expected Year Premium Loss Ratio 0 AY4 4750 0.60 2150 2700 2940 3060 1 2 3 4 3070 AY5 5175 0.62 AY6 5500 0.65 2310 3090 3210 3330 2450 3140 3370 AY7 6200 0.63 2710 3000 AY8 6400 0.66 3000 There is no development past development year 4. (a) Calculate the loss reserve as of December 31, CY8 using the Bornhuetter- Ferguson method and three-year arithmetic average paid loss development factors. Carry four decimal places for all calculations involving the determi- nation of the loss development factors. (b) Suppose you were given cumulative incurred losses instead of cumula- tive paid losses. In theory, how would expected ultimate losses for cumulative incurred loss data compare to expected ultimate losses for cumulative paid loss data? Explain your answer.