Now the forecast payout calculation for the new claims expense is actually much more intuitive to understand. So we've got a snapshot of a model here and we've got a 10-year forecast. And you can see we've started with the historical claims expense there, and then we've forecasted it growing by 4% each year in a forecast along the top here. Now what we've got to do, of course. is we've gotta figure out how this is paid out. And we've taken our claims payout percentages here, which we've taken from the historical analysis in the financial statements. So if we have a claims expense in one year, in that accident year, we'll pay out 53.4, the next year, 24.2, the next year, 8.8, the next year, 4.3%, et cetera, et cetera, until the complete things paid out. So what we'll have to do is we'll take the first forecast year, which is the Year 1, that's our forecast claims expense, the 7,276.9, and then we'll multiply it by the 53.9 to give us our forecast payout for Year 1 for that particular claims expense, which is 3,922.

And then in Year 2, we will take the 24.2 percentage, again, multiply by the 7,276, 'cause we're still paying out that accident year. And that's how we will get our 1,758. And then to get the 643.8, we'll take the 8.8% multiplied by the Year 1 claims expense to get the 643. So this line here gives you the payout pattern, which is developing for Year 1's worth of claims expense. Now let me just change the color because the Year 2 claims expense, which is 7,568, of course, the payouts are only gonna start in Year 2. So that 4,079 number is the 53.9 multiplied by the 7,568.

Because in Year 2, you are actually in the first year of Year 2's claim expense. And you'll do that for every single year. But in Year 2, because you're only forecasting from Year 2 to Year 10, you stop before you completely paid off the expense, simply 'cause you're not modeling any further. So if you compare this to the prior triangle, you can see that almost a mirror image of each other. In this case, the payout is building because we're getting more and more forecast claims expense. In the historical analysis, the payout's declining because slowly you are completely paying off the historical reserve. Now, in a model, you combine those two and you'll end up that the reserve, if your claims expense is growing, should grow as well. But this gives us a very nice way of forecasting a business's payoff of its claims expense, both from the historical years and in the future years.