CAS Exam 6C Spring 2014, Question 20
Study guide: Exam 6C
Identify and briefly explain the impact on the Minimum Capital Test (MCT) if each of the following actions is performed by a company.
Part a (0.5 points)
Reinvests the cash from matured government bonds into common shares.
Part b (0.5 points)
Increases exposure to liability lines of business.
Part c (0.5 points)
Increases the deferred commission amount.
Part d (0.5 points)
Increases the reinsurance quota share percentage with an unaffiliated registered reinsurer.
Part e (0.5 points)
Increases the reinsurance quota share percentage with an unregistered reinsurer. A letter of credit is held in the same amount of the increase of ceded unpaid losses and unpaid premium reserve (UPR).
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