Flashcards in A2. Odomirok 6&7 Deck (13):
Why are nonadmitted assets not included in the surplus calculation
Non admitted assets are not easily convertible cash to satisfy the insurer liabilities
List some differences between preferred stocks and common stocks
-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 on their investment during a liquidation
Why should users be concerned if there are large receivable from parent, subsidiary, or affiliates
They are usually not as liquid as other assets
Portion of agents balances that is nonadmitted
Premium that is over 90 days overdue
How should reserves be booked if management has a range of estimates and no point w/in the range is more likely?
The midpoint should be booked.
Examples of nonadmitted assets
-Investments in bonds, stocks, mortgage loans or real estate that exceed any state limitations.
-Investments in electronic data processing equipment and software that exceed limits
-Furniture, equipment and 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
Define common capital stock
Par value of the insurers stock that is issued and outstanding
2 methods to calculate UEPR
1. Daily pro rata method: based on the number of days of the policy that have expired.
2. Monthly pro rata method: assumes that premiums are written evenly through each month.
Define Gross Paid in and Contributed Surplus
This is generated when the insurer issues stock. It equals the excess of the sale price of stock over its par value
Real Estate Valuation
Properties occupied by the company: depreciated cost-encumbrances
Properties held for the production of income:
Properties held for sale: min(depreciated cost, fair value)-encumbrances
Cash, cash equivalents and STI
Uncollected and Deferred Prem and AB
Amounts recoverable from reinsurers
Receivables from parent, subsidiary and affiliates
Reinsurance payable on LLAE
Premium deficiency reserve
Ceded reinsurance Prem payable
Funds held under reinsurance treaties
Provision for reinsurance