The brief. A reinsurer's board wants to return capital to its shareholder. You are the actuary in the room. There is no single right answer to the last part — grade yourself on whether your answer covers the same ground as the worked one.

Position at the reference date, CHF million:

The board proposes a dividend of CHF 300m.

Your tasks

1. What is the SST ratio today, and what would it be immediately after a 300m dividend?
2. What is the largest dividend that leaves the company in the green band? State it to the nearest million, and state the inequality you solved.
3. Art. 52 ISO requires FINMA's prior approval for solvency-relevant actions if the company would not be in the green band immediately afterwards. Does the proposed 300m dividend need approval? Does your answer to (2) need approval?
4. The CFO points out that the dividend will be paid in nine months, and asks whether the current ratio is the right test. Give the two strongest arguments for testing against a projected position instead, and the strongest argument against relying on a projection.
5. Judgement. The dividend would leave the company green but only barely, and the reinsurer writes a book with a long motor-liability tail. What would you advise, and what would you want to see before advising it?

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