Question 10 - Across more than one Learning Outcome (30 marks) You are a member of the strategy team of KER pic, a global insurer, considering the possible acquisition of RG plc, an insurer. RG pic underwrites property insurance across Europe and North America. You have obtained the following income statement for RG plc: Income statement For the year ended 31st December Income 2023 2022 E'000s E'000s Gross written premium 181,250 150,000 Outward reinsurance premium (63,500) (45,000) Net written premium 117,750 105,000 Net earned premium 103,125 106,250 Net investment return 5,625 3,125 Total income 108,750 109,375 Expenses 2023 2022 E'000s E'000s Gross claims incurred (109,000) 81,250 Reinsurers' share 27,250 20,300 Claims incurred net of reinsurance (81,750) (60,950) Acquisition costs (27,200) (22,500) Other operating expenses (48,300) (40,000) Total expenses (157,250) 123,450) Profit (48,500) (14,075) Note: Figures in brackets are negative. The Strategy Director requires you to analyse and interpret the income statement. a) Explain, with justification, three significant negative features arising from your interpretation of RG pic's income statement. You are not required to show any calculations or workings. (12) (b) Identify, with justification, one potential cause for each of the negative features you have explained in (a) above. (9 ) (c) Recommend with reasons, one action for KER pic to take, in response to each of the negative features that you have explained in (a) above, should it acquire RG pic. (9)