100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
CAS Exam 6 Question And Solution Paper 2024/2025 $14.99   Add to cart

Exam (elaborations)

CAS Exam 6 Question And Solution Paper 2024/2025

 2 views  0 purchase

Purpose of financial reporting Answer: Communicate financial results to the stakeholders Financial reports help stakeholders & regulators: Answer: 1. Track the company's financial performance 2. Compare the company's performance 3. Make informed financial decisions Accountin...

[Show more]

Preview 4 out of 190  pages

  • September 1, 2024
  • 190
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
All documents for this subject (6)
avatar-seller
Schoolflix
CAS Exam 6 Question And Solution Paper
2024/2025

Purpose of financial reporting Answer: Communicate financial results to the stakeholders



Financial reports help stakeholders & regulators: Answer: 1. Track the company's financial
performance

2. Compare the company's performance

3. Make informed financial decisions



Accounting principles prescribed by the State Regulators Answer: Statutory Accounting Principles
(SAP)



Main reason that SAP rules are conservative Answer: Main focus of the regulators is to ensure that
the policyholders will be protected



Primary users of Generally Accepted Accounting Principles (GAAP): Answer: Investors



Main objective of GAAP: Answer: Present results that closely measure the financial performance
during a period (by matching revenues and expenses)



Certain accounting rules can impact many aspects of the actuary's work: Answer: 1. Issuing a SAO

2. Pricing/Designing insurance products

3. Determining capital requirements

4. Evaluating risk transfer of reinsurance contracts

5. Assessing the reserve adequacy of non-insurers

,6. Assisting in the calculation of taxable income

7. Valuing insurers in M&A transactions



Describe the Balance Sheet Answer: Shows the assets and liabilities as of a certain point in time



Role of the actuary in the preparation of the balance sheet Answer: Help value the reserves -
uncertainty associated with the reserves



Describe the Income Statement Answer: Shows the financial results (income) earned during a
period



Actuary's major role in income statement Answer: Estimate the amount and timing of payments



Describe the Capital & Surplus exhibit Answer: Lists those transactions that impact surplus, but
which are not included in the income statement



Describe the Cash Flow Statement Answer: Shows the cash flows into and out of the firm



Different net/gross basis for SAP & GAAP Answer: SAP: net basis

GAAP: gross basis



Describe Notes to the Financial Statements Answer: Quantitative & qualitative disclosures
elaborating on elements from the statements



List a party that would take a "liquidation" view of insurer & one that would take a "going concern"
view: Answer: Liquidation: Regulators

Going concern: Investors

,Compare Fair Value to Historical Cost: Answer: Fair value: value it can be traded at in the open
market

Historical cost: purchase price - depreciation



List an advantage of Fair Value & one for Historical Cost Answer: Fair value: more accurate
(consistent with actual market value)

Historical cost: more reliable (objectively verifiable)



Compare principles to rules, including their respective advantages: Answer: Principle: a general
accounting approach that the users need to interpret

Rule: specific guidance that users need to follow

The rules are easier to interpret, but the principles are more adaptable to changes



Why are nonadmitted assets not included in the surplus calculation Answer: Non admitted assets
are not easily convertible to cash to satisfy the insurers liabilities



Bond face value Answer: amount to be paid in the final single payment



Upon purchase of the bond, record: Answer: the bond at actual cost



Upon purchase of the common stocks, record: Answer: the bond at cost + brokerage fees



After purchase of the common stocks, record: Answer: the bond at fair value



Preferred stocks are valued: Answer: similar to bonds (i.e. NAIC 1-6)

, List some differences between preferred stocks and common stocks: Answer: 1. Preferred stocks do
not offer voting rights

2. Preferred stocks guarantee dividends

3. Owners of preferred stocks have priority to those of common stocks to receive a return of their
investment during a liquidation



Valuation rules of different type of real estate: Answer: 1. Properties occupied by the company
(>50%): Depreciation - Encumbrances

2. Properties held for the production of income: Depreciated cost - Encumbrances

3. Properties held for sale: min (Depreciated cost, Fair value) - Encumbrances



Portion of agents balances that is nonadmitted Answer: Premium that is over 90 days overdue is
nonadmitted



Uncollected premiums & agents' balances Answer: Balances due before the financial statement
date



Deferred premiums Answer: Balances due after the financial statement date



Amounts recoverable from reinsurers includes: Answer: Just the balances due for the losses that
have been paid (the ceding company recognizes recoverables on it unpaid losses by holding the loss
reserves net of recoveries)



Define deferred tax asset (DTA) Answer: Future tax benefits that arise due to temporary differences
in income recognition between tax and statutory accounting



Two common sources of DTAs: Answer: 1. Loss reserves are discounted in tax accounting

2. Carryforward net operating losses

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller Schoolflix. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $14.99. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

78462 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$14.99
  • (0)
  Add to cart