Statutory Income Statement and Capital and Surplus Account Flashcards

1
Q

three sources of income

A
  • underwriting income
  • investment income
  • other income
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2
Q

three ways of allocating expenses in U&IE

A
  • NAIC operating expense classifications (24 classes)
  • expense category: LAE, other underwriting expenses, investment expenses
  • line of business
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3
Q

underwriting income =

A

earned premium - LLAE incurred - underwriting expenses incurred

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4
Q

investment gain/loss =

A

net investment income earned [prior to income tax] + net realized capital gain/loss [after capital gains tax]

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5
Q

two types of investment guidelines

A
  • defined limits - rule-based approach that sets specific quantitative limits
  • prudent person - principle-based approach enabling an insurer to develop its own guidelines that protect policyholders
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6
Q

current year surplus =

A

prior year surplus + net income + other surplus charges + additional capital contributions + stockholder dividends

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7
Q

items that require direct surplus adjustment (5)

A
  • change in unrealized gain/loss
  • change in net deferred income tax
  • change in non-admitted assets
  • change in provision for reinsurance
  • effect of changes in accounting principles
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8
Q

factors to consider when comparing investment income between insurers (3)

A
  • size of average invested assets
  • level of risk in portfolio
  • impact of taxes on investment income
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