Finance

Catastrophe bonds are made available to institutional investors in the

Catastrophe bonds are made available to institutional investors in the capital markets through an entity that is specially created for that purpose. This is entity is called a A) risk retention group. B) fraternal insurance company. C) captive insurance company. D) special purpose reinsurance vehicle.     ANSWER Answer: D

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Date: September 19th, 2020

Gwen is in charge of accounting at Integrity Insurance Company. Integr

Gwen is in charge of accounting at Integrity Insurance Company. Integrity is a publicly-traded insurer. In describing her job, Gwen said, “There aren’t too many businesses where you are required to keep two sets of books.” Gwen’s comment most likely refers to her company A) preparing accounting statements using statutory and GAAP accounting. B) preparing […]

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Date: September 19th, 2020

ABC Insurance Company entered into a reinsurance agreement with XYZ Re

ABC Insurance Company entered into a reinsurance agreement with XYZ Reinsurance. Under the contract, XYZ Re has no liability unless ABC’s loss ratio exceeds 85 percent for the year. XYZ Re agreed to pay all losses in excess of the 85 percent loss ratio. ABC Insurance Company is using reinsurance to A) stabilize profits. B) […]

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Date: September 19th, 2020

State insurance regulators require LMN Life Insurance Company to maint

State insurance regulators require LMN Life Insurance Company to maintain a separate account. The assets in the separate account would support the liabilities for which of the following products? A) term life insurance B) whole life insurance C) fixed annuity D) variable life insurance     ANSWER Answer: D

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Date: September 19th, 2020

When a fraternal insurer began operations, it asked each member, regar

When a fraternal insurer began operations, it asked each member, regardless of age, to pay $20 per month to the fraternal’s group life insurance plan. In exchange, each member received the same amount of life insurance. Soon younger members of the group began to drop out when they realized their premiums were subsidizing a group […]

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Date: September 19th, 2020

Granite Insurance Company entered into a treaty reinsurance agreement

Granite Insurance Company entered into a treaty reinsurance agreement with Rock Solid Reinsurance (RSR). Granite’s retention limit is $400,000 and RSR agreed to provide reinsurance for up to $2.0 million. If Granite writes an $800,000 policy, RSR is responsible for 50 percent of the losses. If Granite insures a $1.6 million risk, RSR is responsible […]

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Date: September 19th, 2020