MSA Ratio Flashcards
1
Q
Give examples of company characteristics not captured in MSA Ratios. (4)
A
- subjective analysis of market position
- quality of management
- quality of reinsurance
- prospects of growth & innovation
2
Q
What does the diversification score measure?
A
- it measures how closely the insurer tracks the overall Canadian market (in terms of geographic & LOB spread)
- if the diversification score is > 65, then the company is highly diversified
3
Q
Give and example of an insurer with low and a high diversification score.
A
LOW: niche insurers
HIGH: national, multi-line insurers
4
Q
Compare ROE (Return on Equity) vs ROR (Return on Revenue).
A
ROE: Return to ShareHolders per unit of capital
ROR: Income relative to the revenue-generating capacity
