Spring 2017 #18b
I calculated IRIS 2 but I don't understand the adjustment made. I do understand the need for the adjustment, just not the methodology. Can you explain generally how we go about making these adjustments and specifically for IRIS 2 why the ratio was scaled up by dividing by (1-.16)? Is there a part in the wiki or in the iris ratio source material that explains making adjustments when the surplus aid ratio is out of usual range?
Comments
The adjustment is taking out surplus aid from surplus.
NAIC wants to see results with surplus aid excluded from surplus, when surplus aid is significant.
In all cases (including IRIS 2), surplus is the denominator. Multiplying surplus by (1-.16) gives surplus without surplus aid. (You take out 16% of it.) This is equivalent to multiplying these IRIS ratios by 1/(1-.16).