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Flashcards in Odomirok 6-7 Deck (9)
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Why are nonadmitted assets not included in the surplus calculation?

Non admitted assets are not easily convertible to cash to satisfy the insurers 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 of their investment during a liquidation


Portion of agents balances that is nonadmitted:

Premium that is over 90 days overdue is nonadmitted


Why should users be concerned if there are large receivables from parent, subsidiary or affiliates?

They are usually not as liquid as other assets


Examples of nonadmitted assets

-Investments in bonds, stocks, mortgage loans or real estate that exceed any state limitations
-Investment in electronic data processing equipment & software that exceed the set limits
-Furniture, equipment & 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


How should reserves be booked if management has a range of estimates, and no point within the range is more likely?

The midpoint should be booked


2 methods to calculate the 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 common capital stock

Par value of the insurers stock that is issued and outstanding


Define gross paid 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