Exam style questions across every AFE domain
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Total Questions : 286
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To realize the effect on the “bottom line,” or the net gain from operations, from various transactions, one must consider the amount of any liabilities that are released because of the transaction. Assume a death claim entry as follows:
Death proceeds-ordinary $10,000
Dividends on deposit disbursed 1,000
Cash $11,000
On first appearance, one might think that this will cause the net gain from operations to be $11,000 lower. However, if the policy has a reserve of $3,000, the effect on the net gain is only , because the reserve liability of $3,000 and the dividend liability of $1,000 will no longer be shown on the balance sheet
When policy periods expire, the premiums written are earned and are recognized as:
Adjusting and Others (AO) reserves are often provided for by using the calendar year paid-to-paid method rather than the accident year paid-to-paid method used for Inflation in Defense & Cost Containment (DCC) reserves.
Inflation in Defense & Cost Containment (DCC) is evaluated separately and is estimated to occur at the same rate as the rate of inflation in the losses.
Primary coverage involves policies written between an insurer and a customer directly.
For purposes of establishing an appropriate financial statement reserve, the most important factors to consider are:
A Company’s investments are admitted assets properly valued which support the reserves and liabilities, including required capital and surplus. Many jurisdictions permit companies to make some investments that do not meet all of the strict regulatory requirements. These additional investments are often referred to as basket assets. Which of the following is/are true for Basket assets?
What is the second-order measure of the interest rate sensitivity of an instrument and the sensitivity of duration to changes in interest rates?
A substantial investment is defined as any investment comprising more than 15 percent of an enterprise’s voting shares or greater than 35 percent of its equity.
