Question

How does reinsurance impact the return on capital for insurers?

a.

It decreases the return on capital

b.

It has no impact on return on capital

c.

It increases the return on capital

d.

It reduces the cost of reinsurance

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (c).It increases the return on capital Explanation:Reinsurance may leverage up the return or risk-adjusted return on capital for insurers by reducing risk, potentially increasing the return on capital.

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Q. How does reinsurance impact the return on capital for insurers?
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