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CPCU 540 CERTIFICATION EVALUATION TEST 2026 TESTED QUESTIONS PRACTICE SOLUTION GRADE A

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CPCU 540 CERTIFICATION EVALUATION TEST 2026 TESTED QUESTIONS PRACTICE SOLUTION GRADE A

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CPCU 540 CERTIFICATION
EVALUATION TEST 2026 TESTED
QUESTIONS PRACTICE SOLUTION
GRADE A
◉ Capacity Ratio aka Premium to Surplus Ratio Formula. Answer:
(Written Premium - Reinsurance Cost) / PH Surplus


◉ Reserves to Surplus Ratio Formula. Answer: (Losses + LAE Reserves
+ Unearned Premium Reserves) / PH surplus


◉ Liquidity Ratio Formula. Answer: (Cash + FMV of invested Assets) /
(Losses + LAE Reserves + Unearned Premium Reserves)


◉ Loss Ratio Formula. Answer: (Losses + LAE Expenses) / Earned
Premium


◉ Expense Ratio Formula. Answer: Incurred UW Expenses / Written
Premium


◉ Combined Ratio Formula. Answer: Loss Ratio + Expense Ratio


◉ Investment Income Ratio Formula. Answer: Net Investment Income /
Earned Premium

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