RBC charge for non-invested assets (excluding investment income due & accrued) is calculated as what?

Prepare for the CAS Exam 6 with detailed study materials. Use flashcards and multiple-choice questions, each with hints and explanations, to get exam-ready!

Multiple Choice

RBC charge for non-invested assets (excluding investment income due & accrued) is calculated as what?

In the RBC framework, assets that are not invested are given a fixed charge to convert their value into a capital requirement. For non-invested assets (excluding investment income due and accrued), the standard factor is 5%, so the charge is 0.05 times the net admitted value. This keeps investment income from being double-counted and reflects the modest risk associated with assets that don’t generate investment income. The 5% rate is used specifically for this asset category, rather than the other rates, which would misstate the risk level.

In the RBC framework, assets that are not invested are given a fixed charge to convert their value into a capital requirement. For non-invested assets (excluding investment income due and accrued), the standard factor is 5%, so the charge is 0.05 times the net admitted value. This keeps investment income from being double-counted and reflects the modest risk associated with assets that don’t generate investment income. The 5% rate is used specifically for this asset category, rather than the other rates, which would misstate the risk level.

More practice questions