May 14th, 2010
GC Videocast - Favorable Investment Returns Subsidize Poor Underwriting Results: An Illustration from Guy Carpenter (Chris Klein)
Posted at 1:00 AM ET
Chris Klein, Guy Carpenter’s Head of Business Intelligence, presents an illustration of the impact that higher investment returns can have on (re)insurer return on equity. A company with a 6 percent investment return is able to earn a 10 percent return on equity despite an unfavorable underwriting ratio. The situation is very different if the investment return drops by only 2 percentage points.
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Source: Guy Carpenter & Company, LLC
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