Exam 7: Financial Operations of Insurers

ABC Insurance Company's investment income ratio last year was 4.2 percent.The company's combined ratio last year was 102.6 percent.What was ABC's overall operating ratio?

JKL Insurance Company reported the following information on its accounting statements last year: Premiums Written $90,000,000 Loss Adjustment Expenses $5,000,000 Underwriting Expenses $30,000,000 Premiums Earned $100,000,000 Incurred Losses $70,000,000 What was JKL's expense ratio last year?

To protect policyholders,state laws place limitations on a life insurance company's investments.The assets backing interest-sensitive products,such as variable life insurance and variable annuities,are not subject to these restrictions.Assets backing interest-sensitive products are placed in a special account called the life insurer's

An Econodeath Insurance Company actuary calculated the present value of the expected death claim the company will pay if it sells whole life insurance to a 30-year-old woman.This value is called the

In schedule rating,each building is individually rated on several factors.One factor refers to the quality of the city's water supply and fire department,and the risk control devices installed in the building.This factor is called

Which of the following statements about retrospective rating is true?

Which of the following statements about schedule rating is (are)true? I.It involves the determination of a basis rate for each exposure,which is then modified by credits or debits. II.It is based on the assumption that certain physical characteristics of the insured's operations will influence the insured's future loss experience.

Life insurance policyholders may borrow the cash value from their life insurance policies.Where are life insurance policy loans shown on a life insurance company's financial statements?

A property and liability insurance company's loss reserve and unearned premium reserve are

Which of the following is an expense for a life insurance company?

Which of the following statements about the combined ratio is true?

XYZ Insurance Company expects $500,000 in claims and loss adjustment expenses for each 1,000 properties that it insures in a certain category of business insurance.What pure premium should XYZ charge for each property insured?

A loss reserve established for each individual claim when it is reported to a property and casualty insurance company is call a(n)

Under one type of merit rating,the class or manual rate is adjusted upward or downward based on past loss history.This type of merit rating is called

Reasons for the unearned premium reserve include which of the following? I.To pay losses that occur during the policy period. II.To pay premium refunds to policyholders in the event of cancellation.

Which of the following items would not appear in the income section of an insurance company's income and expense statement?

The assets of a property and liability insurance company are primarily

Metro City has six different zip codes.XYZ Insurance Company markets coverages in Metro City.Any applicant who lists one particular zip code is automatically quoted a premium that is twenty percent more than the average premium for applicants from the other five zip codes,even if the loss exposure is identical.Which regulatory objective is not being met given XYZ's premium structure?

A property and liability insurance company's loss ratio was 74 percent in 2011,68 percent in 2012,and 66 percent in 2013.The same insurer's expense ratio was 31 percent in 2011,33 percent in 2012,and 30 percent in 2013.Which of the following statements is true about the company's underwriting results?

Monopoly Insurance is the only company marketing a certain line of insurance in a state.After complaints from several consumers,the State Insurance Department investigated Monopoly's rates.The regulators determined that Monopoly was taking advantage of being the only insurer offering the line by charging more than double the actuarial cost of the coverage.Which regulatory rating objective was Monopoly violating?