CAS Exam 6C Fall 2014, Question 22
Study guide: Exam 6C
The following information is available from a property and casualty insurance company's December 31, 2013 P&C-1. All amounts are in thousands of dollars ($000s).
Liabilities and Equity (Page 20.20)
| Item | Amount |
|---|---|
| Shares issued and paid | 900 |
| Contributed Surplus | 150 |
| Retained Earnings | 720 |
| Reserves | 50 |
| Accumulated Other Comprehensive Income (Loss) | 200 |
Accumulated Other Comprehensive Income (Loss) (Page 20.42)
| Accumulated Gains (Losses) on: | Amount |
|---|---|
| Available for Sale: Loans | 10 |
| Available for Sale: Bonds and Debentures | 90 |
| Available for Sale: Equities | 45 |
| Other | 55 |
| Balance at End of Period | 200 |
| Line of Business | Net Written Premium | Net Unearned Premium | Net Unpaid Claims excluding PfAD | Margin on Unearned Premium | Margin on Unpaid Claims |
|---|---|---|---|---|---|
| Property | 1,500 | 900 | 300 | 8% | 5% |
| Liability | 2,500 | 1,500 | 1,875 | 8% | 15% |
Assume that the following components of Capital Required have a non-zero minimum capital amount:
- Balance Sheet Assets
- Unearned Premiums/Unpaid Claims/Premium Deficiencies
Assume there is no Premium Deficiency.
Part a (2 points)
Calculate the capital required for Balance Sheet Assets to achieve OSFI's supervisory ratio.
Part b (0.75 points)
In addition to Balance Sheet Assets, Unearned Premiums, Unpaid Claims and Premium Deficiencies, identify three other main components of the Minimum Capital Required formula.
Answer this question and see the worked solution