On page 11 of the CMP, the following is said: "So to jusitfy the I-E calculation we can consider the classic revenue account statement of profit as follows: Shareholder profit = premiums + income and gains - expenses - claims Here, claims can be considered to be increases in policy reserves plus a claim payment in excess of the opening policy reserve. Policyholder profit is therefore equal to Claims - Premiums and we can re-express the equality as: Shareholder profit + policyholder profit = I - E, as required." My question: the last paragraph where policyholder profit is said to equal claims - premiums is what I do not get? How does this work?
From a policyholder's perspective, he/she receive in benefits (or claims) and pay out premiums. So, a policyholder's profit is C-P. Sarah
