CAS Exam 9 Spring 2013, Question 24
Study guide: Exam 9
You are given the following information for an insurance company:
| Item | Value |
|---|---|
| Return on assets | 5% |
| Underwriting profit | 3% |
| Insurance leverage ratio | 0.5 |
| Premium-to-surplus ratio | 1.5 |
Part a (0.5 points)
Calculate the total return on equity.
Part b (0.5 points)
Explain why investment return on assets might increase in a period of increased profitability
Part c (0.5 points)
Explain why investment return on assets might decrease in a period of increased profitability
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