TIA Section A - Odomirok 6-7 Flashcards

1
Q

Why are non-admitted assets not included in the surplus calculation?

A

Non-admitted assets are not easily convertible to cash to satisfy the insurer’s liabilities

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2
Q

List some differences between preferred stocks and common stocks:

A
  • Preferred stocks do not offer voting rights
  • Preferred stocks guarantee dividends
  • Owners of preferred stocks have priority to those of common stocks to receive a return of their investment during a liquidation
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3
Q

Portion of agents balances that is non-admitted:

A

Premium that is over 90 days overdue is non-admitted

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4
Q

Why should users be concerned if there are large receivables from parent, subsidiary or affiliates?

A

They are usually not as liquid as other assets.

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5
Q

Examples of non-admitted assets:

A
  • Investments in bonds, stocks, mortgage loans or real estate that exceed state limitations
  • Investments in EDP & software that exceed the set limits
  • Non-operating system software
  • Furniture, equipment, & supplies
  • Balances from agent from sale of a security, overdue by over 15 days
  • Funds held at a reinsured company that exceed the associated liabilities
  • 10% of deductibles recoverable in excess of collateral
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6
Q

How should reserves be booked if management has a range of estimates, and no point within the range is more likely

A

The midpoint should be booked.

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7
Q

2 methods to calculate UEPR:

A
  1. Daily pro rata method: based on the number of days the policy that have expired
  2. Monthly pro rata method: assumes that premiums are written evenly through each month
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8
Q

Define common capital stock

A

Par value of the insurer’s stock that is issued & outstanding

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9
Q

Define Gross Paid in & Contributed Surplus:

A

Generated when the insurer issues stock. It equals the excess of the sale price of stock over its par value.

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