CAS Exam 6C Spring 2018, Question 26
Study guide: Exam 6C
A property and casualty insurance company began writing insurance on January 1, 2017 offering property insurance only. The MfAD selected as of December 31, 2017 are as follows:
| MfAD | Selected |
|---|---|
| Claims development | 20% |
| Recovery from reinsurance ceded | 0% |
| Investment return rates | 200 basis points |
Part a (0.75 points)
Based on the CIA's Consolidated Standards of Principle (CSOP) (as printed) identify the range of MfAD for the following:
- i. Claims development
- ii. Recovery from reinsurance ceded
- iii. Investment return rates
Part b (0.75 points)
Explain any assumptions that could be reasonably made about the insurance company's operations based on the selected MfAD.
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