Odomorik 18 - IEE Flashcards Preview

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Flashcards in Odomorik 18 - IEE Deck (23)
1

IEE Part 1

Allocation of other UW expenses

2

IEE Part 2

Allocation of pretax profit by LOB, net

3

IEE Part 3

Allocation of pretax profit by LOB, direct; investment income not available (assets are on net basis)

4

IEE filing date

4/1

5

Expense categories, IEE

LAE, other UW, Investment

6

Allocation of other UW expenses

Commission & brokerage: Acquisition
Other expenses (not taxes): allocated to general expenses or acquisition

7

Other UW expense categories, IEE

Acquisition, Field Supervision & Collection
General
Taxes, Licenses, Fees

8

"Total investible assets"

Sum of mean (net LLAE reserves, net UEPR, ceded reinsurance premiums payable, surplus) minus mean agents' balances

9

"Funds attributable to insurance transactions"

Sum of mean [net LLAE reserves, net UEPR*(1 - prepaid expense %)] minus mean (agents' balances + ceded reinsurance premiums payable)

10

IEE Interrogatories

4.1 Any items requiring special explanation
4.2 Items allocated different from instructions?
4.3 If yes explain.

11

Investment income not shown by LOB in annual statement

Can't be specifically be allocated to policies

12

Allocation of investment income to LOB - regulators

See if LOB rates are excessive/inadequate (would be hidden in overall numbers)

13

Two components on investable income

Funds attributable to insurance transactions
Funds attributable to capital and surplus

14

Prepaid expenses

Commission + Taxes + Other + 0.5*General

15

Investment gain ratio

(Investment income due and accrued + realized)/mean(PHS + LLAE reserves + UEPR reserves - agents balances)

16

IEE as measure of profitability

Best used as retrospective measure, not for pricing as it is based on historical reserves

17

IEE to determine adequacy

Retrospective; not applicable if there have been changes -- look at required return

18

Argument against allocation of surplus using NAIC (and alternate)

Ignores inherent LOB risk (internal model)
Retro approach (TVaR)
Surplus not actually allocated to line

19

IEE uses - actuary

Benchmarking
Identify profitable LOB
Pricing (expense loads)

20

IEE uses - investors

Which insurers to invest in
Analyze insurer historical profitability
Judge company's use of capital

21

IEE uses - competitors

IEE is public
Compare investment income, expenses, etc
Gauge relative profitability

22

Difference between IEE and UIE

IEE includes expenses by LOB
IEE further allocates UW expenses (acquisition, general, taxes)

23

Why adjustment is needed for UEPR in funds attributable to insurance transactions

They have been expensed and not an asset; total investment funds need no such adjustment as PHS includes this