SP7 Practice Question 27.12

Discussion in 'SP7' started by sma09gc, Sep 3, 2017.

  1. sma09gc

    sma09gc Member

    Hi,
    I am just going through this question and the solutions and was wondering whether you could break down the calculations of the following for me:

    -Paid to o/s ratios 51% for 2015 and 67% for 2014

    -how does the change in unearned premiums figure indicate that business volumes fell from 2013 to 2014?

    -how is the ratio of unearned premiums at the end of the year to written premiums during the year calculated?

    -why are some lines on the revenue account unlabelled and what do these represent?

    Thanks for your help, trying to get to grips with accounts but it's proving difficult!
     
  2. Hemant Rupani

    Hemant Rupani Senior Member

    take from Revenue account and balance sheet
    320.7/626=0.51 and 433.1/646=0.67
    we can see from Revenue Account UPR decreased by 37.2 during 2014.
    that indication may not always be true - But, if you take simple scenarios, ie, earning pattern is similar for both years. the decrease in UPR means decrease in Written Premium
    take from Revenue Account and Balance sheet
    368/561.6=0.65
    unlabeled in the same line represent label written in italic fonts.
     
  3. Jammy

    Jammy Very Active Member

    Qn reg the unlabelled items in Revenue account:

    Under earned premiums for 2015:
    (66.5) -- what does it represent?
    I understand that 429.9 is the earned premium, net of RI.
     
  4. Darren Michaels

    Darren Michaels ActEd Tutor Staff Member

    Please accept our apologies there was a typo in the old Q&A bank. This should have been labelled as the "reinsurer's share of the change in the provision for unearned premiums".

    The Q&A bank does not exist any longer and has been replaced by Practice Questions at the end of each chapter for our 2019 materials. This question is now Practice Question 27.12 and the typo has been fixed! I have also renamed this post so others can relate it to the new materials.
     

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