Is trr, total rate of return properly considered a rate of return based
on owner's equity? or a return on surplus?
Well this formula is easy, but consider 2 old questions
1986. an insurer writes business with a ratio of INVESTIBLE LIABILITIES
to annual earned premium of 1.3,.....etc
the trick to solving this was to use
INVESTIBLE ASSETS (IA as required for trr) = INVESTIBLE
LIABILITIES + SURPLUS, or IA= (1.3P +S).
My question, anyone familiar with investible liabilities? Is this
referred to in page 546 of Foundations?
Also from 1990 a problem was given which stated loss reserves are equal
to written premium. The trick on that one was INVESTIBLE ASSETS= surplus
+ loss reserves
so IA = S +P by substitution for loss reserves.
Can anyone comment on these calculations for investible assets required
in the formula, or think of other variations?
thanks for your help.
Bill.
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