Statutory Income Statement and Capital and Surplus Account Flashcards
1
Q
three sources of income
A
- underwriting income
- investment income
- other income
2
Q
three ways of allocating expenses in U&IE
A
- NAIC operating expense classifications (24 classes)
- expense category: LAE, other underwriting expenses, investment expenses
- line of business
3
Q
underwriting income =
A
earned premium - LLAE incurred - underwriting expenses incurred
4
Q
investment gain/loss =
A
net investment income earned [prior to income tax] + net realized capital gain/loss [after capital gains tax]
5
Q
two types of investment guidelines
A
- defined limits - rule-based approach that sets specific quantitative limits
- prudent person - principle-based approach enabling an insurer to develop its own guidelines that protect policyholders
6
Q
current year surplus =
A
prior year surplus + net income + other surplus charges + additional capital contributions + stockholder dividends
7
Q
items that require direct surplus adjustment (5)
A
- change in unrealized gain/loss
- change in net deferred income tax
- change in non-admitted assets
- change in provision for reinsurance
- effect of changes in accounting principles
8
Q
factors to consider when comparing investment income between insurers (3)
A
- size of average invested assets
- level of risk in portfolio
- impact of taxes on investment income
