Schedules & Exhibits

Question 1

General Interrogatories & purpose

Answer 1

• section of AS that contains series of questions that insurer must respond to
• purpose: provide additional clarity to users of AS and identify areas that need further regulatory review
• Part1: common interrogatories
• Part2: questions specific to type of insurer

Question 2

finite insurance

Answer 2

reinsurance that does not transfer UW or timing risk; should really be receiving deposit accounting; help identify contracts that may be improperly accounted for

Question 3

5-Yr Historical Data Exhibit & sections

Answer 3

-provides 5 years worth of data and useful since most other exhibits in AS only provide up to 2

WP

BS
RBC

Operating %

1&2 yr loss development

Question 4

5-Yr Historical Data Exhibit: WP

Answer 4

gross and net summarized by liability, property, property & liab combined, all other, non-prop reinsurance

• can be used to see changes over time in prem, use of reinsurance, business mix
• users should look for rapid change in revenue, changes in level of reinsurance protection, increase in exposure to riskier/unprofitable lines, shifts from liab to property (increased CAT), shifts from prop to liab (more uncertain reserves)

Question 5

5-Yr Historical Data Exhibit: BS

Answer 5

helps identify components of change in surplus

• interested in move to riskier assets
• change in loss reserves, UEP, and surplus relative to MoB

Question 6

5-Yr Historical Data Exhibit: Risk-Based Capital

Answer 6

shows components of RBC ratio

Question 7

5-Yr Historical Data Exhibit: Operating Percentages

Answer 7

shows changes in ratios to EP for loss, LAE, other UW expense, profit

Question 8

5-Yr Historical Data Exhibit: 1&2 yr Loss Development

Answer 8

if development is significant to surplus will need to decide if development is one off or sign of under reserving

Question 9

schedules help indicate

Answer 9

whether large concentration in riskier assets

Question 10

Schedule A

Answer 10

real estate; insurer should not have huge holdings in real estate especially if it writes mainly short tailed lines

Question 11

Schedule B & BA

Answer 11

• B: mortgage loans; Insurers should not have a significant investment in mortgage loan because not part of the core business strategy and illiquid
• BA: other long term assets; should examine how cash flows from long term assets match duration of liabilities

Question 12

Schedule D, DA, DB, DL

Answer 12

• D: stocks and bonds
• DA: short term investments (maturities <1yr)
• DB: derivatives
• DL: securities lending collateral assets; added to AS in 2010; lending certain securities that it is not actively trading to another party, for a fee and borrower will usually short sell the asset, hoping to repurchase it later for a lower price, before returning it to the lender. This exposes the lender to credit risk, so the borrower needs to post collateral.

Question 13

Schedule E

Answer 13

cash and cash equivalents

Question 14

Schedule T

Answer 14

allocates WP, EP, PH dividends, paid loss, incd loss, unpaid loss, finance and service charges, direct prem written for federal purchasing groups to states

Question 15

Schedule Y

Answer 15

provides information about activities of insurer members of a holding company group; org chart and summary of transactions among members of holding company system