Profit sharing and risk limiting features
Why is profit sharing considered a risk limiting feature?
It seems to me like the text is saying that high profit sharing is indicative of insufficient risk transfer, and not that it is the cause of insufficient risk transfer, yet it has been consistently accepted as an answer to identifying risk limiting features (2014F-24, 2016S-16, 2016F-16).
Is it just the CAS being generous with accepted answer or can the profit sharing itself limit risk transfer?
Comments
Your interpretation is correct. I guess it could technically limit risk transfer if there is a pre-baked expectation of large profit sharing. I think the CAS is being lenient in that it is technically under the limitations of risk transfer section and they are fine accepting it as an answer