Finance 336—Principles of Insurance

Professor David T. Russell

EXTRA CREDIT ASSIGNMENT

DUE April 30 at 3:30:00pm (No Excuses)

PICK ONE PAPER: Worth up to 5 percentage points added to your final exam
score!

Note: Because this assignment is extra credit, issuing credit is at the professor’s
discretion—there are no guarantees AND THERE IS NO APPEAL. Sloppy or
incomplete assignments will receive a zero or less than full credit. Scores will not be
known by students until AFTER THE FINAL! Max of ten extra credit points from
ALL sources, if more opportunities materialize.

I will not “pre-grade” your paper. You are to make your own judgment, although you
can ask questions in class so that everyone may benefit from the answer.

Your document will be judged on its content and appearance. The Company need not be
doing well—I will judge your performance solely on how the quality of the information
you provide. DO NOT SIMPLY COPY MATERIAL FROM THE INTERNET
WITHOUT PROPER CITATION OR YOU WILL FAIL THE COURSE. THE
JUDGE’S OPINION IS FINAL!

Your paper should be submitted for review at turnitin.com

You will need to create an account there and then submit an electronic copy before the
deadline.

Class id: Principles of Insurance TBA (enrollment key: insurance99)

1. INSURANCE STOCK PAPER

Pick a US-based, publicly traded insurance company. You are to produce a report about
the company you chose that includes the following:

Company News
A Chart of the Company’s Stock Performance
Accounting Ratio Analysis (see other document)
A Description of the Company
What YOU Find Interesting About the Company
The Company’s Competitors
The Future Outlook for This Company
Anything Else You Find Relevant
ALL FINANCIALS MUST BE FROM March 31, 2020 and after so the numbers are
current.

Accounting Ratios

Here are the Four Accounting Ratios You Need in Your Paper:

Loss Ratio = (Losses + Loss Adjustment Expenses)/Net Premiums Earned

Expense Ratio = Underwriting Expenses/Net Premiums Written

Return on Equity = Net Income/Owners Equity

Loss Reserves-to-Surplus Ratio = ALL Loss Reserves/Surplus

(Surplus is also known as owners’ equity or net worth)
(Reserves are the sum of claims reserves, case reserves, unpaid losses, UPR)

Please think about the importance of each.

If you cannot determine these ratios from the financial information you have, do the best
you can and explain what you did.

2. PROPOSITION 103 PAPER

Research California Proposition 103 which passed in 1988. Describe the changes
introduced by Prop 103 and some background on the politics that led to the passage of
Prop 103. Do you agree with the changes made to rate regulation in California after the
passage of Prop 103? Support your opinion.

3. SOCIAL SECURITY PAPER

Research Social Security’s long term solvency problems. Explain these problems and
evaluate the possible solutions to this problem and defend one or more of these as you
come up with your own plan to fix this important program.