ActEd - this is perhaps one for you but if anyone else has looked at this past exam question, you may be able to help. Part of the question asks you to calculate the Insurance Result as a % of GEP. In calculating the insurance result, the solution takes the underwriting result, adds on the investment return on the os b/f as well as the investment return on 'cashflow'. This investment return on 'cashflow' amounts to £17.5m (before the switch over of the premium income split between EL and Household). However, I can't see how this £17.5m investment return is calculated - if someone can, please explain!
Looks like they've done 8%(300 - 81), ie percentage of premiums less expenses (since expenses paid at start of the year but claims not until the end of the year.
