Why is the investment income calculated by assuming the investment return percentage is applied to half of net cashflow during the year and claims reserves at start of the year and UPR at the start of year?
The examiners are assuming that the UPR and claims reserves wouldn't have been changed throughout the year, so the b/f amounts were held for the whole year. However, the cashflow arose throughout the year, so investment return will only have been earned on half this amount, on average. Other (valid) methods would have scored marks.
