CAS Exam 7 Spring 2015, Question 29
Study guide: Exam 9
Given the following characteristics of two insurance companies writing business exclusively in the U.S.:
| Insurance Company A | Insurance Company B | |
|---|---|---|
| Lines Written | Homeowners | Auto Liability, General Liability |
| States Operating | Florida | All 50 states |
| Invested Assets | U.S. equities only | Foreign equities and foreign bonds only |
| Credit Rating | Strong with negative outlook | Strong with stable outlook |
| Reinsurance Used | Quota Share | Excess of Loss |
| Employee Count | 50 | 300 |
Part a (2 points)
Identify four sources of risk that the two insurers face to different degrees and for each source identified, briefly contrast the two insurers' risk.
Part b (0.5 points)
Propose two changes that Insurance Company A can make to reduce its risk profile
Answer this question and see the worked solution