Statutory Balance Sheet Flashcards

1
Q

two broad ways to classify assets

A
  • cash and invested assets vs non-invested assets

* admitted vs non-admitted assets

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2
Q

SAP carrying value of bonds

A
  • NAIC 1-2 - amortized cost

* NAIC 3-6 - lower of fair value and amortized cost

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3
Q

SAP carrying value of stocks

A
  • common stocks - fair value
  • redeemable preferred stocks, NAIC 1-2 - cost
  • perpetual preferred stocks, NAIC 1-2 - fair value
  • preferred stocks, NAIC 3-6 - lower of fair value and cost
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4
Q

SAP balance sheet classification and valuation of real estate

A
  • occupied by company (at least 50%) - depreciated cost
  • held for production of income - depreciated cost
  • held for sale - lower of fair value and depreciated cost
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5
Q

cash equivalents vs short-term investments

A
  • cash equivalents - original maturity < 3 months

* short-term investments - original maturity < 1 year

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6
Q

examples of non-admitted assets (6)

A
  • investments in excess of state limits
  • portion of DTAs determined by admissibility test
  • premium > 90 days past due
  • furniture, equipment, supplies
  • 10% of deductibles collectible in excess of collateral
  • funds held by reinsured companies that exceed associated liabilities
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7
Q

example of a timing mismatch between revenues and expenses under SAP

A

acquisition expenses are fully realized at policy outset

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8
Q

common sources of DTAs (2)

A
  • loss reserves are discounted for tax purposes but not for statutory purposes, so income is higher on a tax basis
  • carryforward of net operating losses from previous years
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