AIAF 114 ASSIGNMENT 1 EXAM
QUESTIONS WITH COMPLETE
ANSWERS
International Financial Reporting Standards (IFRS) - ANSWER-Financial standards
developed by the International Accounting Standards Board (IASB).
Fair Value - ANSWER-The market value, either actual or estimated, of an asset or a
liability.
Building Block Approach (BBA) - ANSWER-A model for valuing insurance contract
liabilities arising from a group of insurance contracts that is based on the expected
present value of future net cash outflows and a risk margin.
Premium Allocation Approach (PAA) - ANSWER-A model for valuing insurance contract
liabilities arising from a group of insurance contracts that is based on the present value
of premiums for unexpired coverage and the present value of probability-weighted
future payments for incurred losses.
Generally Accepted Accounting Principles (GAAP) - ANSWER-A common set of
accounting standards and procedures used in the preparation of financial statements to
ensure consistency of presentation and reported results.
Statutory Accounting Principles (SAP) - ANSWER-The accounting principles and
practices that are prescribed or permitted by an insurer's domiciliary state and that
insurers must follow.
Mark-to-model - ANSWER-The valuation of an asset based on financial models instead
of market price.
Mark-to-market - ANSWER-The value of an asset or liability based on its current market
price.
Deferral-matching - ANSWER-An accounting approach in which the focus is to
coordinate the timing of income and expense recognition so that both occur when the
triggering event that is the focus of the contract occurs.
Accounts Receivable - ANSWER-A current asset representing monies owed to a
business by customers for good or services rendered.
Reinsurance Recoverable - ANSWER-Amounts for losses and loss adjustment
expenses owed to an insurer under reinsurance agreements covering paid losses.
QUESTIONS WITH COMPLETE
ANSWERS
International Financial Reporting Standards (IFRS) - ANSWER-Financial standards
developed by the International Accounting Standards Board (IASB).
Fair Value - ANSWER-The market value, either actual or estimated, of an asset or a
liability.
Building Block Approach (BBA) - ANSWER-A model for valuing insurance contract
liabilities arising from a group of insurance contracts that is based on the expected
present value of future net cash outflows and a risk margin.
Premium Allocation Approach (PAA) - ANSWER-A model for valuing insurance contract
liabilities arising from a group of insurance contracts that is based on the present value
of premiums for unexpired coverage and the present value of probability-weighted
future payments for incurred losses.
Generally Accepted Accounting Principles (GAAP) - ANSWER-A common set of
accounting standards and procedures used in the preparation of financial statements to
ensure consistency of presentation and reported results.
Statutory Accounting Principles (SAP) - ANSWER-The accounting principles and
practices that are prescribed or permitted by an insurer's domiciliary state and that
insurers must follow.
Mark-to-model - ANSWER-The valuation of an asset based on financial models instead
of market price.
Mark-to-market - ANSWER-The value of an asset or liability based on its current market
price.
Deferral-matching - ANSWER-An accounting approach in which the focus is to
coordinate the timing of income and expense recognition so that both occur when the
triggering event that is the focus of the contract occurs.
Accounts Receivable - ANSWER-A current asset representing monies owed to a
business by customers for good or services rendered.
Reinsurance Recoverable - ANSWER-Amounts for losses and loss adjustment
expenses owed to an insurer under reinsurance agreements covering paid losses.
