Odomirok 13

Question 1

Schedules will help indicate

Answer 1

whether there is a large concentration in riskier assets, in which case the insurer would require additional scrutiny

Question 2

Schedule A

Answer 2

provides details about real estate directly owned by the insurer: 

Part 1 contains details about all of the real estate owned as of 12/31  Part 2 provides a detailed listing of real estate purchased during the year  Part 3 provides a detailed listing of real estate sold during the year

Question 3

An insurer should not have huge holdings of

Answer 3

real estate, particularly if it writes mainly short tailed lines

Question 4

Schedule B

Answer 4

lists the mortgage loans (secured by real estate) owned by the insurer

Question 5

Insurers should not have a significant investment in mortgage loans

Answer 5

 They are not part of the core business strategy 

They are illiquid

Question 6

Schedule BA

Answer 6

other long term assets owned by the insurer

Question 7

Actuaries should examine how the cash flows from the long term assets match

Answer 7

the duration of liabilities

Ideally the insurer would have sufficient cash flow to meet the liabilities.

Question 8

Schedule D

Answer 8

details about stocks and bonds

Part 1 lists the long term bonds

Part 2 lists the stocks owned as of 12/31

Part 3: bonds & stocks acquired during the current year, which are still owned as of 12/31. 

Part 4: bonds & stocks that were owned at the start of the year, but sold (or redeemed) during the year 

Part 5: bonds and stocks acquired and also sold during the year 

Part 6: preferred and common stocks in affiliates

Question 9

Schedule DA

Answer 9

short term investments (maturities from acquisition date of 1 year or less, except for cash equivalents which have maturity from acquisition of 3 months or less)

Question 10

Schedule DB

Answer 10

derivatives owned by the insurer

Question 11

Schedule DL

Answer 11

securities lending collateral assets

added to the Annual Statement in 2010 following the financial crisis of 2008/09

Question 12

Securities lending

Answer 12

involves company lending 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.

Question 13

investing collateral

Answer 13

The lender can invest this collateral, but needs to have it available to return to the borrower when they return the securities so collateral should be invested in short term, low risk, highly liquid markets

Question 14

One of the main purposes of schedule DL

Answer 14

to add transparency

Question 15

Schedule E

Answer 15

cash and cash equivalents

part 1: cash

part 2: cash equilvalents

part 3: special depositts

Question 16

Schedule T

Answer 16

There are 2 parts: 

Part 1: Exhibits of Premiums Written 

Part 2: Interstate Compact – Exhibit of Premiums Written

Each part shows the content by US state & territory, Canada & other alien territories.

Question 17

Part 1 allocates

Answer 17

balances to states: 

Written premiums  Earned premiums 

Policyholder dividends 

Paid losses  Incurred losses  Unpaid losses 

Finance & service charges 

Direct premiums written for federal purchasing groups

Question 18

Part 2 of schedule T applies to

Answer 18

insurers that also write life insurance, annuities, disability income and long term care insurance. Regulators may want to monitor the business from those products for consumer protection purposes.

Question 19

Schedule Y

Answer 19

activities of insurer members of a holding company group

Question 20

parts of schedule Y

Answer 20

Part 1: Organizational chart: this indicates where the company lies within the organization, including its relationship to other members

Part 2: Summary of the transactions among the members of the holding company system

Regulators will use this part to monitor the cash flows between affiliates.