Trickzzz

Question 1

RBC Action Levels

Answer 1

• Company Action
• Regulatory Action
• Authorized Control
• Mandatory Control

TONKA Toy

Question 2

SAO

Answer 2

Identification
Scope
Opinion
Relevant Comments

Question 3

SAO Potential Opinions

Answer 3

No Opinion
Excessive/Redundant
Reasonable
Deficient
Qualified

When you ask an Actuary what their opinion on reserves is, you are asking a Nerd a Question

Question 4

IRIS Ratios

Answer 4

Overall
Profitability
Liquidity
Reserve

Only Profitable Loss Ratios

Question 5

Reinsurance Agreement Terms

Answer 5

Timely payments to cedents
Reporting Quarterly
Insolvency Agreement
Profit (No guarantee)

Reinsure your trip

Question 6

Core Principles - U.S. Financial Solvency

Answer 6

Regulatory Reporting
Off-Site Monitoring
On-Site Financial Exam
Reserve and Capital Adequacy
Regulatory Control
Preventative and Corrective Measures
Exiting the Market/Receivership

Question 7

Exemptions from being labeled as fronting company

Answer 7

Captives
Affiliated Transactions
Pools
Small Amounts

Question 8

Reasons for Gov’t involvement in Insurance

Answer 8

Unmet by pvt mkt
Compulsory
Convenient
Efficient
Social Purposes

Question 9

Notes to Financial Statements Requiring Actuarial Involvement

Answer 9

Discounting
Changes in Incurred Loss/LAE
Reinsurance
Asbestos/Envi
Premium Deficiency Reserves

Question 10

Notes Potentially Relevant to Actuaries

Answer 10

Significant Accounting Policies
High Deductibles
Intercompany Pooling
Structured Settlements
Events Subsequent

Question 11

Recommendations for Risk Margins

Answer 11

Methodology(consistent) over lifetime
Assumptions(consistent) to those made in calculation of liability
Product (vary by)
Sound (consistent with pricing)

Question 12

SAO Relevant Comments

Answer 12

Reinsurance
Assumptions and Methods
Material Adverse Deviation
B (exhibit) significant parts
Longterm Contracts
Ratios (IRIS)

Question 13

SAO: Significant items from part B

Answer 13

Sal and Sub
Pool (Net reserves)
Asbestos/Envi (Net reserves)
Discounting
Extended claims made (L/LAE)

Question 14

5 Steps of a rating process

Answer 14

Background info
Meetings btw analyst and senior management
Proposal
Decision
Publish

Question 15

Stock Valuation

Answer 15

Top 2 redeemable preferred=purchase price + acq costs
Top 2 perpetual= fair value
lower rated all = min(fv, bv)

Question 16

Surplus Adjustment

Answer 16

Prior Surplus
\+ Net Income
\+ Change in net unrealized capital gains LESS capital gains tax
\+change in net unrealized foreign exchange capital gain
\+change in net deferred income tax
- change in nonadmitted assets
-change in provision for reinsurance
\+/- change in accounting principles
\+ capital changes
\+ surplus adjustments
- dividends to STOCKHOLDERS
\+ write-ins"

Question 17

6 principal functions of reinsurance

Answer 17

• Increase large line capacity
• provide catastrophe protection
• stabilize loss experience
• provide surplus relief
• facilitate withdrawal from a market segment
• provide underwriting guidance

Question 18

Motivation for commutation

Answer 18

Believe you are benefitting
Ending a relationship
Exiting a LOB
Solvency Concerns

Question 19

SAO Disclosures (generic)

Answer 19

Accounting changes, Reserves being opined upon, intended Users, Title, Collectibility of reinsurance, Purpose, Basis of reserve presentation, Margins (risk margins), Significant events that could cause material adverse deviation, Discounting of reserves, Gross or net reserves, Other actuary’s analysis being relied upon, Reserve deficiency / redundancy, Qualified opinion