Financials - Yellow Book

Question 1

What is the “Direct” Page?

Answer 1

1st pge/ contains attestations/ state of domicile

Question 2

Quarterly & Annual Statemetns are filed with whom (3)?

Answer 2

DOI / NAIC / AM Best’s

Question 3

What is the intent of WA laws & regulations?

Answer 3

Protect buyer

Question 4

What is the primary exemption for SL insurers?

Answer 4

Rate filings (not security/financial requirements)

Question 5

Why was statutory accounting developed?

Answer 5

Uniformity & consistency of reporting

Question 6

Who developed statutory accounting?

Answer 6

NAIC

Question 7

What does liquidity (solvency) indicate?

Answer 7

Ability to pay claims

Question 8

Yellow book balance sheet

Answer 8

Pages 2 & 3/ Assets = Liabilities + Surplus

Question 9

What is Schedule D?

Answer 9

Bonds

Question 10

What does “investments should parallel liabilities” mean?

Answer 10

Long tail business should have investments that have long maturity/ Short tail business can have investmetns that maure sooner

Question 11

SVO means

Answer 11

Securities Valuation Office

Question 12

Factors to consider in reviewing stock investments (2)

Answer 12

1. SVO value (lowest best)

2. Affiliated & interrelated stock - better security when stocks not related or affiliated

Question 13

What are non admitted assets?

Answer 13

Assets not available to pay claims therefore not counted toward surplus/ Examples: AR (incl agents & reins due) over 90 days & fixtures over 30 days

Question 14

What are Net Admitted Assets?

Answer 14

Total Assests (Page 2) MINUS Non Admitted Assets. Assets available to pay claims (form a statutory perspective)

Question 15

What is Schedule F?

Answer 15

Reinsurance

Question 16

What is Schedule F Part 1?

Answer 16

Assumed Reinsurance (liabilities)

Question 17

What is Schedule F Part 3?

Answer 17

Ceded Reinsurance (Reinsurance Recoverables)

Question 18

Assets 16.1 “Reinsurance” amounts recoverable consists of?

Answer 18

Paid Losses & Paid LAE from Schedule F Part 3 - Reserves & IBNR not included

Question 19

What Schedules OMITT 000 (and need to be added back for calculations?

Answer 19

Schedule F (reinsurance), Schedule P (losses & loss expense)

Question 20

Where are ceded premiums found?

Answer 20

Balance Sheet Liabilites (Page 3) - Not Income

Question 21

Where are Agents balances due found?

Answer 21

Assets (Line 15) - Amount (written premium) due from agent

Question 22

What is Retaliatory Tax?

Answer 22

Pay the same tax rate as domiciled state tax rate in other states even if other state’s tax rate is lower

Question 23

How is accounting handles on a 2 year policy?

Answer 23

Recognition of 2nd year of premium is deferred - allocated to unearned premium reserve

Question 24

How does reinsurance surplus relief improve financials?

Answer 24

Ceding commission is considered direct earned.

Question 25

Simple definition of Surplus (formula)

Answer 25

Assets MINUS Liabilities

Question 26

Expense Ratio formula

Answer 26

"other UW Expenses" (Income Statement) divided by earned premium

Question 27

Loss Ratio formula

Answer 27

Loss + Loss Expense (Income Statement) divided by earned premium

Question 28

Combined Ratio

Answer 28

Expense Ratio + Loss Ratio

Question 29

Statement of Income is on what page?

Answer 29

Page 4

Question 30

Statement of Income shows what?

Answer 30

Change

Question 31

Premium shown on Statement of Income is what type?

Answer 31

Earned

Question 32

What types of premium are shown on Assets?

Answer 32

Only Agents Balances Due & Deferred (no written/ earned or unearned)

Question 33

Where is net written premium found?

Answer 33

UW Exhibit - Part 1 /Part 1B Also Sched T by state

Question 34

Net Premium in yellow book means?

Answer 34

Net of reinsurance.

Question 35

UW Exhibit Part 1 shows

Answer 35

Net Written Premium (Col. 1) & Premium Earned (Col. 4)

Question 36

UW Exhibit Part 1A shows

Answer 36

Unearned premium reserve

Question 37

What is Schedule T?

Answer 37

Written Premium by State

Question 38

What is Schedule Y?

Answer 38

Organizational Chart

Question 39

What is Schedule E - Part 3?

Answer 39

Special Deposits (benefit of policyholders) by state

Question 40

MDA means

Answer 40

Management Discussion & Analysis

Question 41

What is MDA (Management Discussion & Anaylsis)?

Answer 41

Managment assessment & summary of financials

Question 42

UW Exhibit Part 1B (Page 8***) shows

Answer 42

Gross Written Premium = Direct + Reinsurance Assumed & Ceded / ALSO/ Net Premium Written (same as Part 1)

Question 43

"As Of" dates for regulatory exams are dound where?

Answer 43

Interrogatories

Question 44

Where is regulating state listed?

Answer 44

Interrogatories

Question 45

Footnotes (Notes to Financial Statement) - Significant Info (3)

Answer 45

1. Info on parents/subsidiaries/affiliates #10 2. Leases (Long Term Commitments) #15 3. Fair Value Measurements (SVO, etc.)

Question 46

Where is "Capital" (stock) found?

Answer 46

Page 3 Liabilites & Surplus (line 30 & 31) AND 5 Year Historical

Question 47

Where is IBNR found?

Answer 47

UW Exhibit Part 2A (PAGE 10) & Schedule P

Question 48

What is Schedule Y?

Answer 48

Info on Holding Company

Question 49

What does 5 Year Exhibit provide?

Answer 49

Capital, Surplus & Changes

Question 50

Schedule P Part 2 shows

Answer 50

Reserve Development

Question 51

UW Exhibit Part 2 shows

Answer 51

Losses Paid & Incurred