What is the normal range for Change in PHS?

• A. Between -10% and 50%
• B. Between 0% and 20%
• C. Between -5% and 30%
• D. Between -20% and 40%

Answer: (A)

Change in PHS (policyholder surplus) tracks how a company's capital buffer moves from one period to the next, reflecting underwriting results, reserve development, investment performance, and capital actions. A normal range of -10% to 50% captures the typical swing you might see: the surplus can dip modestly if underwriting or reserve factors deteriorate or catastrophe losses hit, but it can rise quite a bit when profits are strong and investments perform well. The lower bound recognizes occasional negative shocks, while the upper bound allows for substantial upside from consistently good results and favorable investment gains.

Other ranges either understate the potential upside or widen the downside beyond what is usually expected in normal operations, making them less representative of typical variability.