Fall 2012 Q21

NycxBattle

For part c) the solution gave this answer

But for Overall Net Leverage, the formula should be
(Net Liabilities + NWP)/EQ

and Net U/W Lev Ratio is NWP/EQ

So when we subtract Net U/W Lev Ratio from Overall Net Leverage (430% - 210%) = 220%

Should 220% be
Net Liabilities/EQ

This is different from Total Liabilities
Total Liabilities = Net Liabilities + Recoverable(s) from Reinsurer.

Luckily we have the ratio of Reinsurance Recoverables to Equity at 6.5%

Now we can equate
Total Liabilities/EQ
=(Net Liabilities + Recoverables)/EQ
= Net Liabilities/EQ + Recoverables/EQ
= 220% + 6.5%

Now we take the ratio of Net Loss Reserve / EQ over this new expression
[Net Loss/EQ]/[Total Liabilities/EQ]
=185%/226.5%
=81.68% (Rounded to 4 decimal place)

Staff-T1

Yeah you are right. I think the sample answer is incorrect

graham

There is also a footnote under the Battle Table for the MSA.Ratios reading about part (c):

• https://battleactsmain.ca/wiki6c/MSA.Ratios#BattleTable

NycxBattle

Sorry I missed the footnote.

graham

No problem! Looks like you are well engaged in slaying the beast.