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Foundations of Casualty Actuarial Science

Investment Income
Money earned from invested assets; may include realized capital
gains, or be reduced by capital losses, over the same period.

Kenney Rule
The ratio of an insurer’s net premium writings to its policyholder
surplus which is considered safe; for multiple line companies,
the ratio is 3:1.

Law of Large Numbers
A mathematical concept which postulates that the more times
an event is repeated the more predictable the outcome becomes.

Layer Rating
The prediction of loss frequency and severity within a given
layer.

Liability
An obligation imposed by law or equity; money owed or expected
to be owed.

Liability Insurance
Protection which pays sums that an insured is legally obligated
to pay, or that the insurer has agreed to pay, as damages to

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