Odomirok 12

Question 1

Five-Year Historical Data Exhibit

Answer 1

Five-Year Historical Data Exhibit provides 5 years worth of data (including the current year)

This exhibit is useful as most of the other exhibits in the Annual Statement only provide up to 2 years data.

Question 2

Written Premium section shows

Answer 2

This shows gross & net premiums, summarized by the following 5 lines:  Liability  Property  Property & liability combined  All other  Non-proportional reinsurance

Question 3

Written Premium section can be used

Answer 3

to see changes over time:  Premium  Use of reinsurance  Business mix

Users should look out for:  Rapid change in revenue  Changes in level of reinsurance protection  Increase in exposure to riskier/ unprofitable lines  Shifts from liability to property lines (increased catastrophe loss)  Shifts from property to liability lines (more uncertain reserves) If any of the above exist, users would need to investigate further by studying the other schedules, exhibits & notes.

Question 4

Balance Sheet sections helps identify

Answer 4

components of the change in surplus

 The actuary would be particularly interested in a move to riskier assets 

The change in loss reserves, unearned premium, and surplus relative to the business mix would also be valuable information

Question 5

Risk-Based Capital section

Answer 5

shows the components of the RBC ratio (but not the actual ratio)

Question 6

Operating Percentages section

Answer 6

This shows the changes in ratios to earned premium of the following: 

Loss  LAE  Other underwriting expenses  Profit

Question 7

One and Two Year Loss Development section

Answer 7

Users may be concerned however if the development is significant relevant to surplus

Users will need to decide if any development is one off, or if it is a sign of underreserving.