T
tde123
Member
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?
"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?
