Allocation of Capital in the Insurance Industry

By J. David Cummins · American Risk and Insurance Association, Inc. · 2000

Study guide: Exam 9

An article that discusses and critiques the methods proposed for allocating capital in financial institutions, with an emphasis on insurance. It covers the rationale for allocating capital by line of business, the implications of regulatory risk-based capital and the capital asset pricing model, the advantages and disadvantages of value-at-risk and insolvency put option criteria, and recently proposed methods of marginal capital allocation. It appeared in Risk Management and Insurance Review, Vol. 3, No. 1, Spring 2000, pp. 7-27.

On the syllabus

• Exam 9 — objectives C1–C4; in the study kit (Cummins Capital), including the study note, an online publication.

Contents unavailable No free copy of this article is published; the CAS supplies it in the Exam 9 study kit and the publisher's page is behind a paywall. This page records its citation, abstract and assignment from the CAS's record of the article and the content outline.

Sources

• Allocation of Capital in the Insurance Industry (CAS abstract record) — the abstract the lead is drawn from, and the volume, number, pages and year; the article itself is not linked from this record
• Allocation of Capital in the Insurance Industry (publisher's record, DOI 10.1111/j.1540-6296.2000.tb00013.x) — the article's DOI; the full text is behind the publisher's paywall and was not readable, so no section headings were taken from it
• CAS Exam 9 Content Outline, Fall 2026 — the citation (Cummins, J. D., Risk Management and Insurance Review, American Risk and Insurance Association, Inc., Spring 2000, Vol. 3, No. 1, pp. 7-27), the abbreviation Cummins Capital, tasks C1–C4, the study-kit source code (SK) and the note that the study note is an online publication (sha256 be1980d4…, version v01 2026-03-18)
• Exam 9 Erratum, Cummins Capital (CAS, January 2026) — the study note the outline links: a three-page note by the CAS Examination and Content Outline (Exam 9) Working Group reporting an error in a formula on page 15 of the article, with its derivation (sha256 b5768e1c…)