TIA Section A - Odomirok 13

Question 1

2 reasons that insurers should not have large investments in mortgages:

Answer 1

1. Not part of the core business strategy
2. They are illiquid

Question 2

Schedule BA of A.S. describes:

Answer 2

This gives information about other long term assets owned by the insurer

Question 3

Schedule D of A.S. describes:

Answer 3

This provides details about stocks and bonds.

Question 4

Schedule DA of A.S. describes:

Answer 4

This provides detail about the short term investments

Question 5

Schedule DB of A.S. describes:

Answer 5

This lists the derivatives owned by the insurer

Question 6

Schedule DL of A.S. describes:

Answer 6

This provides detail about securities lending collateral assets.

Question 7

Describe the securities lending process

Answer 7

A company lends securities 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.

Question 8

In a securities lending process, why does the borrower need to post collateral?

Answer 8

This exposes the lender to credit risk

Question 9

In securities lending, why should the collateral be invested in short term, low risk, highly liquid markets?

Answer 9

1. The arrangements between borrower and lender are usually short term
2. The borrower can usually return the securities with short notice

Question 10

Schedule E of A.S. describes:

Answer 10

This provides detail about cash and cash equivalents.

Question 11

List some reasons that Schedule T is useful to actuaries:

Answer 11

• They can see where the company writes business
• historical schedules can show if the insurer has changed its geographic exposure

Question 12

Schedule Y of A.S. describes:

Answer 12

This provides information about activities of insurer members of a holding company group