What is cash flow underwriting? Why is it a concern for insurance companies?
What will be an ideal response?
Cash flow underwriting is the practice of selling insurance coverage at below actuarial costs and making up the difference with investment income. For example, if an exposure was sold at an expected combined ratio of 0.92, .08 would have to be made in investment earnings to break even. Cash flow underwriting is a concern because underwriting is risky enough without having to rely on an uncertain investment return to produce adequate dollars.
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In a manual double-entry accounting system, an increase in assets is recorded on the
A) credit side B) debit side C) cash side D) both A and B
The financial statements that are prepared for the business are separate and distinct from the owners according to the
a. going-concern assumption. b. matching principle. c. economic entity assumption. d. full disclosure principle.