Odomirok Ch 12: 5 year historical data

Question 1

Sections of 5 Year Historical Data Exhibit

Answer 1

• Written Premium
• Balance Sheet
• Risk Based Capital
• Operating Percentages
• One and Two Year Loss Development

Question 2

What should users look out for in the Written Premium section?

Answer 2

• 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)

Question 3

What does balance sheet show?

Answer 3

This section helps identify the 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 4

What Operating Percentages are shown?

Answer 4

Changes in ratios to earned premium of the following:

• Loss
• LAE
• Other underwriting expenses
• Profit