PR Correct in KPMG.RegOv Pop-Quiz?
The pop-quiz in the KPMG.RegOv atricle has a question on the participation ratio.
The question gives non-ceded and ceded premiums, and asks for the company's PR. The answer is given as insurer(non-ceded)/industry(non-ceded).
I'm questioning if this is correct, since the PR should be based on DIRECT earned exposures. But, I'm understanding correctly, "non-ceded" is actually equivalent to net exposures, since non-ceded = direct [+assumed] - ceded = net.
So, the direct exposures would sub the two rows together, and the PR would be (2800 + 110) / (15,000 + 1000) = 18.19%
Comments
Why would you say non-ceded is equivalent to the net exposures? I think the wiki is correct. The calculation is based on q7 in Fall 2015