Odomirok 18 Flashcards

1
Q

List the 3 parts of the IEE:

A
  1. Part 1: Allocation of other underwriting expenses
  2. Part 2: Allocation of pretax profit by line, on a net basis
  3. Part 3: Allocation of pretax profit by line, on a direct basis
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2
Q

When does the IEE need to be filed

A

4/1 following the Annual Statement date.

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3
Q

List some uses of the IEE:

A
  • Regulators: monitor the financial health of the insurer. It may indicate trends by line of business may threaten the solvency of the entire insurer
  • Regulators: monitor rate adequacy.
  • Stakeholders: determine the lines that were profitable, and use this knowledge to help make business decisions
  • Investors: help determine how much to invest in the insurer
  • Actuaries: source of premium, losses and expenses for benchmarking
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4
Q

What categories are expenses divided into in Part 1 of the IEE:

A
  • LAE
  • Other Underwriting Expenses (further allocated into Acquisition, Field Supervision & Collection Expenses/ General Expenses/ Taxes, Licenses & Fees)
  • Investment Expenses
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5
Q

What categories does the IEE divide the investment gain into:

A
  • Investment Gain on Funds Attributable to Insurance Transactions
  • Investment Gain Attributable to Capital & Surplus
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6
Q

What is surplus allocated proportional to:

A

Mean net loss & LAE reserves + Mean UPR + EP for the year

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7
Q

Equation for Investment gain ratio

A

= Net investment gain / Total investable assets

Where Total investable assets = Mean net loss & LAE reserves + Mean net unearned premium reserves + Mean ceded reinsurance premiums payable + Mean policyholders’ surplus - Mean agents’ balances

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8
Q

Equation for Investment gain on funds attributable to insurance transactions:

A

=Investment gain ratio * Funds attributable to insurance transactions for the line

Where the funds attributable to insurance transactions for each line:
=Mean net loss & LAE reserves + Mean UPR * [1 - (prepaid expenses / written prem)] - (Mean net agents’ balances. - ceded reinsurance premiums payable)

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9
Q

Formula for Prepaid Expenses

A

Commission & Brokerage expenses incurred + Taxes, licenses & fees incurred + Other acquisition, field supervision & collection expenses + (1/2) * general expenses incurred

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10
Q

Formula for Total Investment Gain

A

=company’s investment gain ratio * investable funds associated with the LOB

Where investable funds associated with the LOB = Mean net loss & LAE reserves + Mean UPR - Mean net agents’ balances + Ceded reinsurance premiums payable + Allocated PHS.

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