MSA.Ratios

Question 1

Give examples of company characteristics not captured in MSA Ratios (4)

Answer 1

• Subjective analysis of market position
• Quality of management
• Quality of Reinsurance
• Prospects for growth & innovation

Question 2

What does diversification score measure?

Answer 2

• Measures how closely the insurer tracks the overall Canadian market (in terms of geographic & LOB spread)
• If diversification score is greater than 65, then company is highly diversified

Question 3

Give examples of an insurer with a low/high diversification score

Answer 3

Low: Niche Insurers
High: national, multi-line writers

Question 4

Compare the MSA ratios: ROE & ROR

Answer 4

ROE: attempts to measure return to shareholders per unit of capital

ROR: measures the income generated relative to its revenue generating capacity