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
2
Q
SAP carrying value of bonds
A
- NAIC 1-2 - amortized cost
* NAIC 3-6 - lower of fair value and amortized cost
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
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
5
Q
cash equivalents vs short-term investments
A
- cash equivalents - original maturity < 3 months
* short-term investments - original maturity < 1 year
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
7
Q
example of a timing mismatch between revenues and expenses under SAP
A
acquisition expenses are fully realized at policy outset
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