Odomirok 11

Question 1

Purpose of common interrogatories section

Answer 1

Give more details about companies
operations
business practices
and internal/external controls

Question 2

Items discussed in general section of common interrogatories

Answer 2

• Latest regulatory exams
• Excessive sales commission levels
• Merger activity
• Suspension of licenses
• Exemptions from required regulations
• Foreign control

Question 3

Examples of insight that users can get from the general section of the common interrogatories

Answer 3

• High commission levels: may be sacrificing commission to maintain or grow business
• Suspended license: does not comply with regulations or lacks internal discipline

Question 4

What do interrogatories contain about board of directors

Answer 4

• Role of approving purchase/sale of investments
• Any process in place to notify board of conflicts within senior management
• Whether permanent records of board proceedings retained

Question 5

Purpose of financial interrogatories

Answer 5

• If insurer has financial obligations not reported in annual statement
• If insurer providing significant financial support to stakeholders/affiliates

Question 6

What areas do the investment interrogatories question

Answer 6

• Asset and investment decisions
• Security lending programs
• Hedging programs
• Mandatory convertible stocks/bonds

Question 7

How do interrogatories help identify if an insurer is using finite reinsurance

Answer 7

Insurer must answer if it ceded reinsurance that:

• Resulted in UW gain/loss or ceded premium/loss reserves >5% of prior surplus
• Was accounted for as reinsurance ( not deposit)
• Duration >2 years and non cancelable, limited cancellation provision, contains agg stop loss coverage, or ability to report/pay losses less frequently than quarterly

Question 8

Second interrogatory asked to insurer

and two exceptions

Answer 8

If ceded premium is >50% of gross premium or >25% of ceded premium is retroceded back to the insurer
Exceptions: reins ceded to entities under insureds control or ceded to approved pooling arrangement

Question 9

What details does the General Section disclose about the latest financial exam

Answer 9

• Date of latest exam
• Date through which statements evaluated
• Release date for examiner’s report
• Whether the insurer has complied with all adjustments and recommendations from the examination report