CAS Exam 9: Financial Risk and Rate of Return
An overview of CAS Exam 9 covering financial risk management and return on capital for P&C insurers.
Financial Risk
Exam 9 covers financial risk management topics including asset-liability management, investment strategy for insurance companies, and derivative instruments used for hedging. You must understand how interest rate risk, credit risk, and market risk affect an insurer's financial position. The exam integrates concepts from corporate finance and investments with insurance-specific applications.
Rate of Return and Capital Management
The rate of return section covers methods for incorporating the cost of capital into insurance pricing. Topics include the Capital Asset Pricing Model (CAPM), discounted cash flow analysis for insurance, and risk-adjusted return measures. You must understand how to determine fair rates of return for insurance operations and how capital allocation affects pricing decisions. As the final CAS fellowship exam, Exam 9 requires synthesis of material from the entire CAS curriculum. Success requires both deep technical knowledge and the ability to analyze complex, multi-faceted problems in a written-answer format.