CAS Exam 6C Fall 2014, Question 19
Study guide: Exam 6C
The following information is available for a property and casualty insurance company as at December 31, 2013:
| Calendar Year | 2009 | 2010 | 2011 | 2012 | 2013 |
|---|---|---|---|---|---|
| Expense Ratio | 25.5% | 25.0% | 25.0% | 24.5% | 25.5% |
| Investment Yield | 3.5% | 3.0% | 2.5% | 2.5% | 3.0% |
| Return on Equity | 10.0% | 2.0% | -10.0% | 10.0% | 5.0% |
Cumulative Paid Losses
| Accident Year | Development Month 12 | Development Month 24 | Development Month 36 |
|---|---|---|---|
| 2011 | 60,000 | 75,000 | 175,000 |
| 2012 | 50,000 | 100,000 | |
| 2013 | 50,000 |
Case Reserves
| Accident Year | Development Month 12 | Development Month 24 | Development Month 36 |
|---|---|---|---|
| 2011 | 150,000 | 100,000 | 0 |
| 2012 | 275,000 | 250,000 | |
| 2013 | 150,000 |
Provision for IBNR (undiscounted)
| Accident Year | Development Month 12 | Development Month 24 | Development Month 36 |
|---|---|---|---|
| 2011 | 50,000 | 25,000 | 0 |
| 2012 | 50,000 | 25,000 | |
| 2013 | 50,000 |
Effect of Discounting and PFAD
| Accident Year | Development Month 12 | Development Month 24 | Development Month 36 |
|---|---|---|---|
| 2011 | 18,000 | 12,500 | 0 |
| 2012 | 29,250 | 27,500 | |
| 2013 | 18,000 |
Part a (0.75 points)
Calculate the undiscounted excess / (deficiency) ratio for year 2012 as at December 31, 2013.
Part b (1.75 points)
Calculate the cumulative discounted excess / (deficiency) ratio for year 2011 as at December 31, 2013.
Answer this question and see the worked solution