My goodness what a lot of questions!
I think you'd find the ASET useful as it gives a much more detailed explanation than the Examiners' Report. (The current ASET won't include the 2011 exams, but I'm sure one or two older versions are available if you ring the switchboard and ask nicely 
. Just bear in mind that the older versions won't reflect the latest Core Reading, but that shoudn't be a problem for this question.)
It also sounds like you need to revise some key ideas relating to accounts. Again, ASET can help you there. Don't forget the Q&A bank either, I think you'd find it invaluable. There's also the ST7 Q&A bank if you're looking for extra practice at accounts questions.
In the meantime, I've given you some brief explanations below.
The combined ratio is 115% (ie 85% loss ratio + 30% expense ratio), so the business is loss making.
No.
It looks like this is a typo in the Examiners' Report. UEP probably means "unearned premium", which is 400 not 600.
Yes.
You are given the position as at 30th September. The year-end position will depend on how premiums, expenses and claims will develop in the next three months. (The examiners are assuming that investment income will not have a material impact on profitability.)
NEP is net earned premium. Profit is a function of premiums, claims, expenses etc. So if NEP increases, so will the year end profit.
Any assessment of profitability needs to take premium growth into account, because there are three months to go before the year-end.
That's one example, yes.
"Infrastructure" means road / rail networks. For example, if rail services improve, fewer people may travel by bike so premium may fall.
High set up costs will impact the first 6 months but not the rest of the year. So the expense ratio will be higher if only the first 6 months are considered.
Yes, this is an error in the Examiners' Report.
Last edited: Jan 20, 2015
