TIA Section A - Odomirok 18 Flashcards
List the three parts of the IEE
- Part 1: Allocation of other underwriting expenses
- Part 2: Allocation of pretax profit by line, on a net basis
- Part 3: Allocation of pretax profit by line, on a direct basis
When does the IEE need to be filed
4/1 following the Annual Statement date
List some uses of the IEE
- Regulators: monitor the financial health of the insurer.
- Regulators: monitor rate adequacy
- Stakeholders: determine the lines that were profitable
- Investors: help determine how much to invest in the insurer
- Actuaries: source of premium, losses and expenses for benchmarking
What categories are expenses divided into in Part 1 of the IEE
- LAE
- Other Underwriting Expenses
- Investment Expenses
List the categories of Other Underwriting Expenses
Acquisition, Field Supervision & Collection Expenses/ General Expenses/ Taxes, Licenses & Fees
What categories does the IEE divide the investment gain into
- Investment Gain on Funds Attributable to insurance transactions
- Investment Gain Attributable to Capital and Surplus
What is surplus allocated proportional to:
Mean net loss and LAE reserves + Mean UPR + EP for the year
Equation for Investment Gain Ratio
= Net Investment Gain
___________________
Total Investable Assets
Equation for Total Investable Assets
= Mean net loss & LAE reserves + Mean net unearned premium reserves + Mean ceded reinsurance premiums payable + Mean policyholders’ surplus - Mean agents’ balances
Total Investable Assets =
Equation for investment gain on funds attributable to insurance transactions
= Investment gain ratio * Funds attributable to insurance transactions for the line
Equation for funds attributable to insurance transactions
= Mean net loss & LAE reserves + Mean UPR * [1-(prepaid expenses/written premium)] - (Mean net agents’ balances - ceded reinsurance premiums payable)
Formula for Prepaid Expenses
Commission & Brokerage expenses incurred + Taxes, licenses & fees incurred + Other acquisition, field supervision & collection expenses + (1/2) * general expenses incurred
Formula for Total Investment Gain
= company’s investment gain ratio * investable funds associated with the LOB
Equation for investable funds associated with the LOB
= Mean net loss & LAE reserves + Mean UPR - Mean net agents’ balances + Ceded reinsurance premiums payable + Allocated PHS
