Odomirok 13 Flashcards
2 reasons that insurers should not have large investments in mortgages:
- They are not part of the core business strategy
2. They are illiquid
Schedule BA of A.S. describes:
This gives information about other long term assets owned by the insurer
Schedule D of A.S. describes:
This provides details about stocks and bonds.
Schedule DA of A.S. describes:
This provides detail about the short term investments
Schedule DB of A.S. describes:
This lists the derivatives owned by the insurer
Schedule DL of A.S. describes:
This provides detail about securities lending collateral assets.
The purpose is to add transparency about these assets
Describe the securities lending process
Securities lending is when a company lends certain securities that it is not actively trading to another party for a fee. The borrower will usually short sell the asset, hoping to repurchase it later for a lower price, before returning it to the lender. This exposes the lender to credit risk, so the borrower needs to post collateral. The lender can invest this collateral, but needs to have it available to return to the borrower when they return the securities.
In securities lending, why should the collateral be invested in short term, low risk, highly liquid markets:
- the arrangements between borrower and lender are usually short term
- the borrower can usually return the securities with short notice
Schedule E of A.S. describes:
This provides detail about cash and cash equivalents.
List some reasons that Schedule T is useful to actuaries:
- They can see where the company writes business, so that they can research the relevant insurance laws of the state.
- By looking at historical schedules, they can see if the insurer has changed its geographic exposure
- When industry factors are used, this can help derive the weight to apply to the industry factors from each state
Schedule Y of A.S. describes:
This provides information about activities of insurer members of a holding company group
