MSA Glossary of Terms and Acronyms

A Glossary of Terms and Acronyms
ASO Administrative Services Only.
BAAT Branch Adequacy of Assets Test (branch test introduced in 2003)
BV, MV Book Value & Market Value
CAGR Compound Annual Growth Rate. The CAGR is the average compound annual percentage growth rate of the item in question. In formula terms: (Value at Year 5) = (Value at Year 1)*(1+CAGR)4

Please note that the multi-year summaries for ‘Change in NPW’, ‘Change in GPW’ and ‘Change in Equity’ in Exhibit 2 are CAGR measures. A ‘c’ flag indicates this.
Combined Ratio aka COR or U/W Ratio Also known as the ‘underwriting ratio’. The combined ratio equals total underwriting expenses as a percentage of premiums earned. A ratio under 100% indicates that the insurer made an underwriting profit, while a ratio over 100% indicates that the insurer incurred an underwriting loss. Investment income and capital gains are not taken into account in the combined ratio, thus a company will likely still be profitable with combined ratios in the 100-105% range.
CY/PY Current Year, Prior Year
Dev % % Development (of unpaid losses)
DPAE Deferred Policy Acquisition Expense
GPW Gross Premiums Written
IBNR Incurred But Not Reported (claims)
JV’s Joint Ventures
L/R, NLR, DLR Loss Ratio, Net Loss Ratio, Direct Loss Ratio. Loss ratios are calculated by taking claims incurred as a percentage of premiums earned.
LAE, ULAE, ALAE Loss Adjustment Expenses, Unallocated Loss Adjustment Expenses (these are typically internal adjustment expenses), Allocated Loss Adjustment Expenses (typically external adjustment expenses).
MCT Minimum Capital Test
NPE Net Premiums Earned
NPW, DPW Net Premiums Written (after reinsurance), Direct Premiums Written (before reinsurance)
OSFI The Office of the Superintendent of Financial Institutions (Canada’s federal regulator).
PfAD Actuarial Provision for Adverse Deviation. Typically a component of IBNR.
P&C-1, P&C-2 The P&C-1 is the statutory filing statement required of Canadian domiciled property and casualty insurers. The P&C-2 statement is required of foreign branches operating in Canada.
Reg., Un-Reg. Registered (licensed reinsurance), Unregistered (unlicensed reinsurance)
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