Direction(1-5): Read the following passage carefully and answer the questions given below it.

That 2017 suffered from more than its fair share of natural catastrophes was known at the time. In the wake of Hurricane Harvey, the streets of Houston, Texas, were submerged under brown floodwater; Hurricane Irma razed buildings to the ground on some Caribbean islands. That the destruction was great enough for insurance losses to reach record levels has only just been confirmed. According to figures released on January 4th by Munich Re, a reinsurer, global, inflation-adjusted insured catastrophe losses reached an all-time high of $135bn in 2017 . Total losses (including uninsured ones) reached $330bn, second only to losses of $354bn in 2011.

A large portion of the losses in 2011 was caused by one catastrophe: the earthquake and tsunami in Japan. Losses in 2017 were largely traceable to extreme weather. Fully 97% were weather-related, well above the average since 1980 of 85%. If climate change brings more frequent extreme weather, as Munich Re and others expect, last year’s loss levels may become depressingly familiar. Already, the data show many more frequent high-loss events since 2000—lots of them weather-related—than in the two preceding decades.

Last year’s disasters were particularly concentrated in North America (including the Caribbean), with 83% of global losses; half of those were in America alone, hitting that country’s insurers particularly hard. Fitch, a ratings agency, expects the “combined ratio” for American property-and-casualty insurers to rise from 100.7% in 2016, meaning costs and claim payouts just exceeded premium revenue, to 104.4% in 2017. That implies a substantial underwriting loss for the industry. Even Warren Buffett’s Berkshire Hathaway looks poised for its first full-year underwriting loss in 15 years. It took a $3bn hit from the three hurricanes and an earthquake in Mexico.

For all the gloom, the 2017 losses were also proof of the resilience of the reinsurance industry. Insurers have long spread catastrophe risk by taking out reinsurance policies. This time, reinsurers had such ample capital buffers that they are expected to suffer only a small dent, of around 5-7% of capital. And 2017 was also the biggest test so far of reinsurance provided directly by investors, whether through catastrophe bonds or “collateralised reinsurance”, where a fund manager puts up collateral to cover potential claims. These forms of “alternative capital”, which reached $89bn in mid-2017, now make up around 14% of total reinsurance capital, up from 4% in 2006, according to Aon, a broker.

Their performance has been remarkably smooth. Investor demand has held up; many asset managers in the field have raised new money since the losses. Demand may yet grow further, says Paul Schultz, head of Aon’s capital-markets arm, since the yields on alternative capital are poised to rise because of growth in reinsurance premiums. Mr Schultz’s concerns lie elsewhere: he laments that the proportion of all losses covered by insurance “is still too small”. Much risk is retained by governments, or uninsured. Offloading more to private markets would benefit governments, property owners and the insurance industry alike.

1. What is true regarding the passage?

  1. Due to natural disaster insurance losses reached to a record high.
  2. There were less uninsured loss in this year’s natural disaster.
  3. Mostly uninsured loss was not due to natural disaster.
Ans: 1
High losses due to natural disaster is there . and uninsured loss is also high. Mostly loss is due to natural disaster.

2. What is the author’s fear described in the passage?

  1. Author said that losses due to bad weather may increase in near future.
  2. Author said that catastrophe may increase in near future.
  3. Author argue that losses may be increase due to non catastrophic reasons.
Ans: 4
1 and 2 are the main fear described in the passage.

3. What is the main problem for the insurer of North America?

  1. More disaster in North America as compared globally.
  2. Costs and claim payout exceeded the insurer total revenue in last two year.
  3. Its not easy to identify whom to pay claims.
Ans: 4
3 is not mentioned in the passage. 1 and 2 are the main problem of insurer.

4. What is the concern of Mr. Schultz?

  1. He argued that mostly losses are covered by government.
  2. Losses covered by insurance companies are very low as compared to total catastrophic loss.
  3. Increase in the losses due to weather.
Ans: 4
Mr. Schultz didn’t argue about increase in loss due to bad weather.

5. Which of the following can be the suitable title of the passage?

  1. Catastrophic losses and insurers
  2. Increase in catastrophic losses
  3. Loss of the insurance companies
  4. North America : a victim of catastrophic loss
Ans: 1
1 is the most suitable title as passage tell about catastrophic loss and insurer both.

Directions (6-10): Read the following passage carefully and answer the questions given below it.

They are not extinct, nor even on the endangered-species list. But company analysts, once among the most prestigious professionals in the stockmarket, are being culled. New European rules, with the catchy name of MiFID2, have just dealt analysts another blow. A study by Greenwich Associates estimates that the budget for the research they perform may drop by 20% this year. In their heyday in the late 1980s and early 1990s, analysts could make or break corporate reputations. A “buy” or “sell” recommendation from the leading two or three analysts in an industry could move a share price substantially. Fund managers, and many financial journalists, relied on analysts to spot those companies that were on a rising trajectory, and those where the accounts revealed signs of imminent trouble. And the best analysts were very well paid. But that golden age was built on some rusty foundations. Analysts were well paid because they worked for the big investment banks. But those big banks made money not just by helping investors to trade but also by advising companies on new issues, and on mergers and acquisitions. In such circumstances, there was an implicit bargain that analysts would be positive about a company’s prospects. If they were not, the chief executive might take his business elsewhere. Over time, “buy” recommendations far exceeded “sell” suggestions. This looked less like dispassionate analysis than marketing. A second problem came in the 2000s as regulators cracked down on the way that companies released news to the market. Information could no longer be selectively released to favoured analysts. By the same token, those “Sherlock-like” analysts who liked to spot trends through independent company visits faced difficulties. Everything came to depend on the profits guidance issued by companies for the next quarter or year. And analysts dared not let their forecasts stray too far from what the companies suggested. The paradoxical result was that finance, an industry whose acolytes often trumpet the superiority of free-market economics, had created a poorly functioning market—one that was oversupplied with analysts who mostly offered the same product. Why, then, did it survive at all? The conventional way that investors rewarded banks for good research was not to pay for it directly, but to funnel securities trades their way. This system of “soft” commissions created two conflict-of-interest questions. Were fund managers trading more than they needed to just to pay for their research? And were they getting the best terms available when they did that trade? In both cases, the client, not the fund manager, was in effect paying for the service. There was little incentive to change.

Under the new MiFID rules, banks will not be allowed to bundle research up with other products. Fund managers will have to pay for it separately. As a result, they are expected to be much more selective. This recalls Dr Johnson’s response when Boswell asked whether the Giant’s Causeway in Northern Ireland was worth seeing. The great man replied: “Worth seeing, yes; but not worth going to see.” The suspicion is that, for many fund managers, the work of analysts is “worth having, but not worth paying to have”. The rules may technically apply only to Europe but even American investment banks are expected to adjust their business models to cope with MiFID. The employment prospects of analysts had already been hit by index-tracking, or “passive” fund management, which simply buys all the shares in a benchmark, and by the growth of quantitative hedge funds, which use computer programs to select stocks. But the best analysts need not despair completely. The biggest fund managers employ in-house research. Some may be willing to pay for analysis from independent boutiques (as has been the case in the world of economics). The fear, however, is that something will be lost in the process. For all their faults, analysts acted as conduits for company information to be passed to investors who could not afford their own research (charities and small pension funds, for example) and, via the media, to the general public. A few heroic analysts (one thinks of Richard Hannah, a long-term Eurotunnel sceptic) proved adept at exposing corporate flimflam.Alas, the industry generated far too few sceptics and far too many corporate cheerleaders. The baby is being thrown out with the bathwater—but in recent times it was a very small baby amid an awful lot of murky water.

6. What is true regarding the passage?

  1. The profession of company analysts is reducing day by day.
  2. Author thinks that profession of company analyst will be extinct in near future.
  3. Total budget for the research have dropped this year.
Ans: 3
Author doesn’t say or can be concluded anywhere in the passage that analyst will extinct.

7. Earlier what is true regarding analysts?

  1. Earlier top analyst can increase the reputation of any corporate companies.
  2. Analyst can move any share price substantially.
  3. Mostly analyst gave wrong suggestions to their company.
Ans: 4
3 is not given anywhere in the passage.

8. What is the main problem of analysts according to the passage?

  1. There was some problem for investor form the side of regulators.
  2. In the 2000s companies guided their analyst to forecast according to the advice of companies.
  3. Free functioning of analysts stopped.
Ans: 5
All of the given sentence are correct according to the passage.

9. Which can be true from the given sentences?

  1. There is new MiFID rule in which bank will not be allowed to research up with other products.
  2. Bank doesn’t pay their researcher directly from investor rewards.
  3. Investors are not relying on the bank’s research for their investment.
Ans: 4
There is no mention about the reliability of the investors in bank’s research.

10. Which of the following can be the suitable title for the passage?

  1. Drowning profession of analysts.
  2. Pros and cons of being an analyst.
  3. Golden age of analyst.
  4. Making a company reputed.
Ans: 1
According to the 1 is the most suitable title of the passage.
Pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60

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