2. Accounting
3. an insurance company starts on 12312017 with 600000 in cash...

# Question: an insurance company starts on 12312017 with 600000 in cash...

###### Question details

An insurance company starts on 12/31/2017 with $600,000 in cash. On 1/1/2018 it sells a one year policy (Policy A) for$250,000.  On 4/1/2018 it sells a one year policy (Policy B) for 200,000 (note: this means that three-quarters of Policy B will have “earned out” by the end of 2018.  On 1/1/2019 it sells Policy C for $200,000. It stops writing policies after selling Policy C. Investment Income The company earns$30,000 of investment income in 2018.  It earns $40,000 of investment income in 2019. Expenses In 2018,$90,000 of underwriting expenses are incurred.  In 2019, $50,000 of underwriting expenses are incurred. Losses On 5/1/18, a$10,000 claim on Policy A is paid.

On 9/1/18, a $12,000 claim on Policy B is paid. At 12/31/18, there case reserves of$25,000 for Policy A and $15,000 for Policy B. There is IBNR of$100,000 for Policy A and $95,000 for Policy B. On 3/1/19, a$22,000 claim is paid for Policy A.

On 6/1/19, a $21,000 claim is paid for Policy B. On 7/1/19 a$26,000 claim is paid for Policy C.

On 12/31/19, there case reserves and IBNR of $15,000 for Policy A,$40,000 for Policy B, and \$90,000 for Policy C.

1. Calculate total incurred loss and net income or loss for the 2018 and 2019 calendar years.