premium/surplus
R/S (or maybe 1+R/S)
Insurance exposure? Leverage ratio? Something else? And which is which?
premium/surplus
R/S (or maybe 1+R/S)
Insurance exposure? Leverage ratio? Something else? And which is which?
In the Ferrari paper, premium/surplus is referred to as insurance exposure and 1+R/S is the leverage factor.
Don’t know about exam 9, but we just call it premium to surplus ratio in my line of work.
Leverage ratio usually is a measure of your debt to income/equity ratio, so definitely not that,.
Reserves can be thought of as your “debt” so R/S gives you an indication of how leveraged an insurance company is. I agree it might not be the standard definition but the definitions in my comment above are what the paper on the syllabus uses.
Oh, it says R/S, I read it as P/S. Yeah, reserve can be thought of as debt for sure. Leverage ratio makes sense in that context.
Thanks. I don’t know why some facts like this just won’t sink in.