CAS Exam 6C Fall 2019, Question 23
Study guide: Exam 6C
The following information is available for a federally regulated property and casualty insurance company as at December 31, 2018. All amounts are in thousands of dollars ($000s).
| 20.10 – Assets | Current year | Prior year |
|---|---|---|
| Cash and Cash Equivalents | 0 | 0 |
| Investment Income due and accrued | 0 | 0 |
| Total Investments | 380,000 | 350,000 |
| Recoverable from Reinsurers – Unearned Premiums | 70,000 | 60,000 |
| Recoverable from Reinsurers – Unpaid Claims and Adjustments | 140,000 | 140,000 |
| Total Assets | ? | 700,000 |
| 20.20 – Liabilities and Equity | Current year | Prior year |
|---|---|---|
| Unearned Premiums | 140,000 | 120,000 |
| Unpaid Claims and Adjustments | 380,000 | 350,000 |
| Total Liabilities | 650,000 | 600,000 |
| 20.30 – Statement of Income | Current year | Prior year |
|---|---|---|
| Premiums Written – Direct | 200,000 | 180,000 |
| Premiums Written – Reinsurance Assumed | 30,000 | 20,000 |
| Premiums Written – Reinsurance Ceded | 80,000 | 50,000 |
| Underwriting Income (Loss) | 13,000 | 8,000 |
| Net Investment Income | 17,000 | 10,000 |
| Total Income Taxes | 7,000 | 5,000 |
| Net Income (Loss) for the Year | 23,000 | 13,000 |
| 20.54 – Statement of Changes in Equity | Current year | Prior year |
|---|---|---|
| Total Comprehensive Income for the Year | 30,000 | 18,000 |
| Dividends – Preferred | 1,000 | 1,000 |
| Dividends – Common | 14,000 | 9,000 |
The company has no income from subsidiaries and no realized capital gains.
Part a (2 points)
Calculate the following key financial indicators for the current year:
- i. Return on revenue
- ii. Net loss reserves to equity
- iii. Overall net leverage
- iv. Investment yield
Part b (1 point)
Comment on the company's financial health.
Answer this question and see the worked solution