CAS Exam 6C Fall 2015, Question 21
Study guide: Exam 6C
You are given the following information about a monoline property and casualty insurance company. All amounts are in thousands of dollars ($000s).
Balance Sheet
| December 31, 2013 | December 31, 2014 | |
|---|---|---|
| Cash | 5,000 | 3,000 |
| Bonds and Debentures | 34,000 | 27,000 |
| Equity | 3,000 | 7,000 |
| Real Estate | 0 | 10,000 |
| Accounts Receivable | 6,000 | 7,000 |
| Recoverable from Reinsurers | 0 | 0 |
| Other Assets | 2,000 | 2,000 |
| Total Assets | 50,000 | 56,000 |
| Accounts Payable | 3,000 | 3,500 |
| Unearned Premiums | 4,000 | 5,500 |
| Unpaid Claims and Adjustment Expenses | 25,000 | 28,000 |
| Premium Deficiency | 200 | 1,000 |
| Other Liabilities | 2,000 | 2,000 |
| Total Liabilities | 34,200 | 40,000 |
| Retained Earnings | 12,800 | 12,800 |
| Accumulated Other Comprehensive Income | 3,000 | 3,200 |
| Total Equity | 15,800 | 16,000 |
Explain which of the two year-ends is likely to have a lower MCT ratio.
Part a (1 point)
Answer this question and see the worked solution