Mutual Property Insurance Company has a surplus of $2 million.According to a conservative rule,how much in new net premiums can Mutual Property Insurance Company safely write?

Question

Quizplus · Accepted Answer

The conservative rule states that a mutual property insurance company can safely write new net premiums up to 4 times its surplus. Therefore, Mutual Property Insurance Company can safely write $2 million x 4 = $8 million in new net premiums.

Mutual Property Insurance Company Has a Surplus of $2 Million