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ii . A summary of the financial statements for the last two years ( prepared on an accident year basis ) for an insurer specialising
ii A summary of the financial statements for the last two years prepared on an accident year basis for an insurer specialising in crop insurance is shown below. It is also revealed that outstanding claims reserves at were: Calculated on a discounted basis, having been calculated on an undiscounted basis in prior years this led to a decrease in claims reserves; and Increased by to allow for estimated crop damages resulting from a severe storm on the th January Explain whether the calculation of outstanding claims reserves at by the insurer complies with the relevant accounting concepts. iii. Restate the P&L Account for and Balance Sheet at assuming the above adjustments to outstanding claims reserves had not been made. Assume investment income and dividends remain unchanged and a tax rate on profits of iv Calculate the following ratios for the last two years, using the restated financials: a Claims ratio; b Expense ratio; c Return on capital employed; and d Solvency ratio. v Comment on the trends by referring to the ratios in part i and any others you calculate.
ii A summary of the financial statements for the last two years prepared on an accident year basis for
an insurer specialising in crop insurance is shown below.
It is also revealed that outstanding claims reserves at were:
Calculated on a discounted basis, having been calculated on an undiscounted basis in prior years
this led to a decrease in claims reserves; and
Increased by to allow for estimated crop damages resulting from a severe storm on the th
January
Explain whether the calculation of outstanding claims reserves at by the insurer complies with
the relevant accounting concepts.
iii. Restate the P&L Account for and Balance Sheet at assuming the above adjustments
to outstanding claims reserves had not been made. Assume investment income and dividends remain
unchanged and a tax rate on profits of
iv Calculate the following ratios for the last two years, using the restated financials:
a Claims ratio;
b Expense ratio;
c Return on capital employed; and
d Solvency ratio.
v Comment on the trends by referring to the ratios in part i and any others you calculate.
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