CAS Exam 6C Spring 2018, Question 17
Study guide: Exam 6C
The following information is available for a property and casualty insurance company as at December 31, 2017. All amounts are in millions of dollars.
| Item | Amount |
|---|---|
| East Canada PML 500 | 130 |
| West Canada PML 500 | 300 |
| East Canada PML 250 | 80 |
| West Canada PML 250 | 200 |
| Financial resources to support the company's earthquake risk | 150 |
Where PML represents the Probable Maximum Loss
Other information:
- The company does not purchase reinsurance.
- The company is phasing in the use of PML 500 until 2022.
Part a (1.5 points)
Calculate the Earthquake Reserve Component for 2017.
Part b (1 point)
Briefly describe four sound earthquake modeling best practices.
Part c (0.5 points)
Identify two financial resources that could be used to support the company's earthquake exposures.
Answer this question and see the worked solution