Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem 1:

a) State the benefits and drawbacks of discounting the technical reserves.

b) Company A and Company B have always had exactly similarly portfolio of business, each taking 50% of any risk on a coinsurance basis. In their published accounts, company A sets reserves which are intended exactly to pay for outstanding claims, discounted at the rate of interest the company expects to earn on its assets. Company B’s reserves always comprise a 20% margin for prudence above the amount it believes essential to pay these claims, and it doesn’t discount its reserves.

Describe the differences between the accounts of Company A and Company B, as they would appear to an analyst who was not aware of this information.

problem 2:

a) Describe what is meant by the term under-insurance and why clients engage in same?

b) Penny Sue insures her car for Rs 500,000 for a one-year period. The market value of this car is presently Rs 750,000. The insurance policy has an excess of Rs 15,000. One month after taking the policy, Penny Sue meets with an accident.

i) In the event of a net loss claim, how much would she get from her insurer? 
ii) In the event of a claim estimated at Rs 100,000, how much would she get from her insurer?
iii) In the event of a claim estimated at Rs 15,000, how much would she get from her insurer?
iv) If the policy had a deductible of Rs 15,000 instead of an excess of 15,000, how would this change your answer to parts (i) to (iii) above?

c) List the three ways insurance companies can use to decrease under-insurance and describe their efficiency in practice.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M96456

Have any Question? 


Related Questions in Basic Finance

Explain both interest rate swaps and currency swaps which

Explain both interest rate swaps and currency swaps. Which instrument has a greater credit risk: an interest rate swap or a currency swap? How can multinational companies utilize a currency swap to reduce borrowing costs ...

The first four questions are true and false1 in order to

The first four questions are true and false 1. In order to tell the impact of a change in a constraint coefficient, the change must be made and then the model resolved. 2. Any change to the objective function coefficient ...

1 what is hrs role in developing glue technology2 what does

1. What is HR's role in developing glue technology? 2. What does it mean for Teva to be an Israeli global company?

Explain why option traders often use spreads instead of

Explain why option traders often use spreads instead of simple long or short options and combined positions of options and stock ? Suppose that an option trader has a call bull spread. The stock price has risen substanti ...

1 discuss some advantages and disadvantages to consider

1. Discuss some advantages and disadvantages to consider when considering FDI in a developing nation. 2. Identify a business that is not already franchising but has potential for international franchise success. Support ...

Imagine you obtained a point biserial correlation of 35

Imagine you obtained a point biserial correlation of .35 between gender and punctuality, showing that men arrived later to class than did women. You think that this correlation might be due to the fact that more women th ...

1 what are the four basic goals of behavioral research2

1. What are the four basic goals of behavioral research? 2. Distinguish between basic and applied research. In what ways are basic and applied research interdependent?

Abc corp produces and sells high-end entertainment systems

ABC Corp. produces and sells high-end entertainment systems. Its average selling price is currently $3,200 per system. Based on a review of its projected financial statements, the company's variable costs are $1,200 per ...

1 what is a mortgage pay-through bond mptb how does it

1. What is a mortgage pay-through bond (MPTB)? How does it resemble a mortgage-backed bond (MBB)? How does it differ? 2. Are the overcollateralization requirements for mortgage pay-through bonds the same as for mortgage- ...

1 briefly describe the unique aspects of revenue

1. Briefly describe the unique aspects of revenue recognition for an insurance company. 2. Insurance industry-specific financial ratios are usually prepared from financial statements prepared under what standards? 3. Ins ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro