Odomirok 6-7 Flashcards Preview

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Flashcards in Odomirok 6-7 Deck (9)
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1

Why are nonadmitted assets not included in the surplus calculation?

Non admitted assets are not easily convertible to cash to satisfy the insurers liabilities

2

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

3

Portion of agents balances that is nonadmitted:

Premium that is over 90 days overdue is nonadmitted

4

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

They are usually not as liquid as other assets

5

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

6

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

7

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

8

Define common capital stock

Par value of the insurers stock that is issued and outstanding

9

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