CAS Exam 9 Spring 2013, Question 25
Study guide: Exam 9
Given the following for an insurance company:
| Item | Value |
|---|---|
| Invested assets | $30,000,000 |
| Owners' equity | $15,000,000 |
| Reserve-to-equity ratio | 1.0 |
| Investment return | 6% |
| Insurance operating results as a percent of reserves | 5% |
Part a (1 point)
Calculate the return on owners' equity.
Part b (1 point)
Discuss the impact of non-equity financing on the quality of an insurer's earnings.
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