BMS Pathlight Analytics – 0422-01

Observations:

Future growth plans already put pressure on BCAR in year 1 necessitating a change in capital strategy. Options 2 and 3 afford the most long term growth in surplus (less ceded margin over time).

The larger QS cession options have a detrimental impact on profitability.

BCAR

Earnings

Options Current and 4 afford the highest ROE.

Surplus

ROE

In this specif ic case, our client’s current capital level was not suff icient to support their f ive-year strategic plan. Their key objectives were to protect their stressed BCAR and minimize volatility. Options 2 and 3 performed best long term, but 2 came with a larger debt facility than the client was willing to entertain. For this reason, the blended QS/debt option (3) was their selection. Answers Not Output Capital is a critical part of any strategic plan. We provide clients with the intelligence they need to compare all available options and make an informed decision.

Surplus (M) ROE Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5

Current Option 1 Option 2 Option 3 Option 4

$184.1

$217.8

$262.7

$320.4

$387.3

5.5% 16.8% 18.7% 19.8% 18.9%

$169.2

$186.0

$210.3

$244.1

$284.4

-0.5% 9.5% 12.3% 14.9% 15.3%

$236.4

$267.5

$309.6

$364.5

$428.6

2.9% 12.3% 14.6% 16.3% 16.2%

$209.5

$234.9

$269.9

$316.4

$371.0

1.7% 11.4% 13.9% 15.8% 15.9%

$169.2

$186.0

$213.6

$261.7

$325.4

-0.5% 9.5% 13.8% 20.2% 21.7%

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