Case 12-3

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1. To find out what is Rock Solid policyholders’ surplus you would take the company asset which is 900 million and subtract the firm liabilities of 640 million. As a result, the policyholder surplus would be 260 million. 5. To find the gross rate per unit of coverage that should be changed Lonnie would take the pure premium and divide it by 1 take away the expense ratio. As a result Lonnie would get 500 for the gross rate.

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