A4. Odomirok 11 Flashcards Preview

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Flashcards in A4. Odomirok 11 Deck (9):
1

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

2

Purpose of Common Interrogatories section:

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

3

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

4

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

5

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

6

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

7

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

8

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

9

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