GC Videocast - Favorable Investment Returns Subsidize Poor Underwriting Results: An Illustration from Guy Carpenter (Chris Klein)
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.
Source: Guy Carpenter & Company, LLC