MSA

Question 1

MSA - MCT formula

Answer 1

Capital available / capital required; min 150%

Question 2

MSA - GAAP ROE

Answer 2

NI / Equity; min 5.4%

Question 3

MSA - Return on revenue

Answer 3

(sum of UW income, investement income, and income from subsidiaries) / gross written premium; min 6.2%

Question 4

MSA - Return on assets after tax

Answer 4

Net after-tax income as percentage of average assets; min 2.6%

Question 5

MSA - Insurance return on net premium earned

Answer 5

(UW income and investment income attributed to UW activity) / net premium written; min 4%

Question 6

MSA - Liabilities as percentage of liquid assets

Answer 6

measure of liquidity; max 105%

Question 7

MSA - Net loss reserves to equity

Answer 7

high ratio and inadequate loss provisions mean financial distress exposure; max 200%

Question 8

MSA - Cash flow from operations to net premium written

Answer 8

ability to convert premium to positive cash flows; min 0%

Question 9

MSA - One year development to equity

Answer 9

use discounted loss reserves and investment income; min -10%

Question 10

MSA - Overal net leverage

Answer 10

(net written premium and net liabilities) / equity; max 500%

Question 11

MSA - Adjusted investment yield

Answer 11

2*(Net investment income + OCI)/(Begin plus ending invested assets - net investment income - OCI)

Question 12

MSA - Reinsurance Recoverables to equity

Answer 12

high ratio indicated dependancy on reinsurance

Question 13

MSA - Net underwriting leverage

Answer 13

net written premium / equity ; max 300%

Question 14

MSA - Two-year combined ratio

Answer 14

under 100 is profit

Question 15

MSA - Overall diversification score

Answer 15

based on product of scores of 1-10 for geographic and line of business spread