Financials - Yellow Book Flashcards
What is the “Direct” Page?
1st pge/ contains attestations/ state of domicile
Quarterly & Annual Statemetns are filed with whom (3)?
DOI / NAIC / AM Best’s
What is the intent of WA laws & regulations?
Protect buyer
What is the primary exemption for SL insurers?
Rate filings (not security/financial requirements)
Why was statutory accounting developed?
Uniformity & consistency of reporting
Who developed statutory accounting?
NAIC
What does liquidity (solvency) indicate?
Ability to pay claims
Yellow book balance sheet
Pages 2 & 3/ Assets = Liabilities + Surplus
What is Schedule D?
Bonds
What does “investments should parallel liabilities” mean?
Long tail business should have investments that have long maturity/ Short tail business can have investmetns that maure sooner
SVO means
Securities Valuation Office
Factors to consider in reviewing stock investments (2)
- SVO value (lowest best)
2. Affiliated & interrelated stock - better security when stocks not related or affiliated
What are non admitted assets?
Assets not available to pay claims therefore not counted toward surplus/ Examples: AR (incl agents & reins due) over 90 days & fixtures over 30 days
What are Net Admitted Assets?
Total Assests (Page 2) MINUS Non Admitted Assets. Assets available to pay claims (form a statutory perspective)
What is Schedule F?
Reinsurance
What is Schedule F Part 1?
Assumed Reinsurance (liabilities)
What is Schedule F Part 3?
Ceded Reinsurance (Reinsurance Recoverables)
Assets 16.1 “Reinsurance” amounts recoverable consists of?
Paid Losses & Paid LAE from Schedule F Part 3 - Reserves & IBNR not included
What Schedules OMITT 000 (and need to be added back for calculations?
Schedule F (reinsurance), Schedule P (losses & loss expense)
Where are ceded premiums found?
Balance Sheet Liabilites (Page 3) - Not Income
Where are Agents balances due found?
Assets (Line 15) - Amount (written premium) due from agent
What is Retaliatory Tax?
Pay the same tax rate as domiciled state tax rate in other states even if other state’s tax rate is lower
How is accounting handles on a 2 year policy?
Recognition of 2nd year of premium is deferred - allocated to unearned premium reserve
How does reinsurance surplus relief improve financials?
Ceding commission is considered direct earned.
Simple definition of Surplus (formula)
Assets MINUS Liabilities
Expense Ratio formula
“other UW Expenses” (Income Statement) divided by earned premium
Loss Ratio formula
Loss + Loss Expense (Income Statement) divided by earned premium
Combined Ratio
Expense Ratio + Loss Ratio
Statement of Income is on what page?
Page 4
Statement of Income shows what?
Change
Premium shown on Statement of Income is what type?
Earned
What types of premium are shown on Assets?
Only Agents Balances Due & Deferred (no written/ earned or unearned)
Where is net written premium found?
UW Exhibit - Part 1 /Part 1B Also Sched T by state
Net Premium in yellow book means?
Net of reinsurance.
UW Exhibit Part 1 shows
Net Written Premium (Col. 1) & Premium Earned (Col. 4)
UW Exhibit Part 1A shows
Unearned premium reserve
What is Schedule T?
Written Premium by State
What is Schedule Y?
Organizational Chart
What is Schedule E - Part 3?
Special Deposits (benefit of policyholders) by state
MDA means
Management Discussion & Analysis
What is MDA (Management Discussion & Anaylsis)?
Managment assessment & summary of financials
UW Exhibit Part 1B (Page 8***) shows
Gross Written Premium = Direct + Reinsurance Assumed & Ceded / ALSO/ Net Premium Written (same as Part 1)
“As Of” dates for regulatory exams are dound where?
Interrogatories
Where is regulating state listed?
Interrogatories
Footnotes (Notes to Financial Statement) - Significant Info (3)
- Info on parents/subsidiaries/affiliates #10
- Leases (Long Term Commitments) #15
- Fair Value Measurements (SVO, etc.)
Where is “Capital” (stock) found?
Page 3 Liabilites & Surplus (line 30 & 31) AND 5 Year Historical
Where is IBNR found?
UW Exhibit Part 2A (PAGE 10) & Schedule P
What is Schedule Y?
Info on Holding Company
What does 5 Year Exhibit provide?
Capital, Surplus & Changes
Schedule P Part 2 shows
Reserve Development
UW Exhibit Part 2 shows
Losses Paid & Incurred
