A4. Odomirok 11 Flashcards Preview

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Flashcards in A4. Odomirok 11 Deck (9):

Items discussed in General section of the Common Interrogatories

-Holding company relationships
-Latest regulatory financial exams
-Excessive sales commission levels
-Merger activity
-Suspension of licenses
-Foreign Control
-Exemptions from required regulations
-Whether senior management is subject to a code of ethics


Purpose of Common Interrogatories section:

Give more details about the company's:
-business practices
-types of internal and external controls in place


What details does the General Section disclose about the latest financial exam:

-Date of the latest exam
-Date through which the statements were evaluated
-Release date for the examiner's report
-Name of department performing the exam
-Whether the insurer has complied with all adjustments and recommendations from the examination report


List some examples of insight that users can get from the General section of the Common Interrogatories

-If it has suspended licenses or does not comply with regulations, perhaps it lacks internal discipline
-If it has high commission levels, maybe it is sacrificing its commission in order to maintain or grow business


Purpose of Financial interrogatories:

Help users understand:
-If the insurer has financial obligations that were not reported in the Annual Statement
-If the insurer has been providing significant financial support to its stakeholders/ affiliates


What questions do the interrogatories contain about the board of directors:

-Role of the board in approving the purchase/ sale of investments
-Does the company have a process in place to notify the board of conflicts of interest within senior management
-Whether the permanent records of the board proceedings are retained


How do the interrogatories help identify if an insurer is using finite treatment

The insurer needs to answer an interrogatory that asks if it ceded reinsurance that:
-Resulted in an underwriting gain/ loss of more than 5% of the prior surplus; or ceded premiums/ loss reserves of more than 5% of surplus
-Was accounted for as reinsurance (not deposit)
-Had at least one of the following features: Duration of at least 2 years and non-cancelable/ Limited cancellation provision/ Aggregate stop loss coverage/ Either party has the right to commute for a reason other than the downgrade in the credit rating of the other party/ Ability to
report or pay losses less frequently than quarterly/ Delayed reimbursements to the ceding company


What areas do the Investment Interrogatories question?

-Assets and investment decisions
-Security lending programs and associated collateral
-Hedging programs
-Mandatory convertible stocks or bonds
-Compliance with NAIC Purposes and Procedures Manual


P/C interrogatories

-exposure to CAT events
-process used to calculate PML
-level of reinsurance protection
-any limiting provisions with reinsurance contracts, guaranteed policies and retro policies
-any releases of liability under reinsured policies
-exposure to warranty business