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Flashcards in IRIS Deck (17)
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1
Q

Equation and Normal range for GWP:PHS

A

Equation: GWP/PHS

Normal range: Less than 900%

2
Q

Factors to consider if Ratio 1 is unusual

A
  • Compare to ratio 2
  • LOB
  • Profitability
  • Direct vs assumed business
3
Q

Equation and normal range for NWP:PHS

A

Equation: NWP/PHS

Normal range: Less than 300%

4
Q

Factors to consider if ratio 2 is unusual

A
  • If member of group or affiliates, what is the aggregate ratio?
  • Profitability
  • LOB
  • Adequacy of reinsurance protection
5
Q

Equation and normal range for change in NWP

A

Equation: (Current NWP - Prior NWP)/Prior NWP

Normal range: between -33% and 33%

6
Q

Factors to look into if change in NWP ratio is unstable

A
  • Are the assets properly valued & liquid enough to meet cash demands?
  • Are the reserves adequate?
7
Q

Increased NWP does not necessarily mean there is a greater chance of insolvency, if it is accompanied by

A
  • Low NWP: PHS ratio (ratio 2)
  • Adequate reserving (ratios 11, 12, 13)
  • Profitable operations (ratios 5)
  • Stable product mix
8
Q

Equation and normal range for surplus aid: PHS

A

Equation: Surplus aid/PHS
Surplus aid = ceding commissions x sum of UEPR (non affiliates)
Normal range: Less than 15%

9
Q

Issues related to a high surplus aid ratio

A
  • It may indicate that management believes that surplus is inadequate
  • Surplus aid may improve the results of the other ratios to such a degree that it conceals important areas of concern
10
Q

Equation and normal range for 2 yr overall operation ratio

A

Equation: 2 yr loss ratio + 2 yr expense ratio + 2 yr investment ratio
Normal range: Less than 100%

11
Q

Equation and normal range for investment yield

A

Equation: -2 x Net investment income earned/cash & invested assets between current & prior years
Normal range: Between 3 & 6.5%

12
Q

Equation and normal range for gross change in PHS

A

Equation: change in PHS/ prior PHS

Normal range: between -10% and 50%

13
Q

Equation and normal range for change in adjusted PHS

A

Equation: Change in adjusted PHS/Prior PHS
Change in adjusted PHS = change in PHS - change in surplus notes - capital paid in - surplus paid in
Normal range: Between -10% and 25%

14
Q

Equation and normal range for adjusted liabilities: Liquid assets

A

Equation: Adjusted liabilities = Liabilities - Liabilities equal to deferred agent’s balances
Liquid assets = liquid assets - investments in parents, subsidiaries and affiliates
Normal range: Less than 100%

15
Q

Equation and normal range for gross agents balances: PHS

A

Equation: Gross agents balances in the course of collection/PHS
Normal range: Less than 40%

16
Q

Equation and normal range for 1 yr reserve development to PHS

A

Equation: one year reserve development/prior PHS

Normal range: Less than 20%

17
Q

Equation and normal range for estimated current reserve deficiency to PHS

A

Equation: Deficiency/PHS
Reserves required = premiums earned x ratio of reserves: premium
Normal range: Less than 25%