IC 11 - Practice of General Insurance Exam Study Notes

MPT is, therefore, a form of diversification. Under certain assumptions and for specific quantitative definitions of risk and return, MPT explains how to find the best possible diversification strategy.
Arguments against MPT - (i) financial returns do not follow a symmetric distribution. (ii) correlation between asset classes is not fixed but can vary depending on external events (especially in crises). (iii) growing evidence that investors are not rational and markets are not efficient.
Asset-liability management basically refers to the process, by which an institution manages its balance sheet, in order to allow for alternative interest rate and liquidity scenarios. Banks and other financial institutions provide services, which expose them to various kinds of risks like credit risk, and liquidity risk. Asset liability management is an approach that provides institutions with protection that makes such risks acceptable.
Accurate claims reserving is critical for continuing profitability of an insurer
There are two main sets of Reserves - premium (unearned premium and unexpired risk) and claims (open claims reserve and IBNR).

Licentiate Examination - IC 11 - Practice of General Insurance Exam - Important Points