AFE Accredited Financial Examiner Questions and Answers

A change in _______ or its application is appropriate if the change results in a measurement that is equally or more representative of fair value in the circumstances.

The two most common types of dollar rolls are:

For purposes of establishing an appropriate financial statement reserve, the most important factors to consider are:

The Appointed Actuary has a responsibility to express an opinion on the appropriateness of certain actuarially determined amounts in the financial statements.

What technique uses a risk-adjusted discount rate and contractual, promised, or most likely cash flows?

What allows an entity to eliminate the reserve that was recorded for the claim, even if it exceeded the amount paid for the settlement?

In determining whether an operation is self-sustaining or integrated, what you do not need to consider is:

Which of the following id NOT the kind of Insurance?

Final approval should be obtained prior to placing a new system into operation is the activity that can be fall into which control?

The loss reserve estimate is a significant estimate in the financial statements of an uninsured entity.

The pro rata portion of premiums written allocable to unexpired policy periods represents unearned premiums, which are reflected as in the balance sheet.

The method which assumes that an entity’s experience in estimating case-basis reserves will be repeated in the future is called:

What is the second-order measure of the interest rate sensitivity of an instrument and the sensitivity of duration to changes in interest rates?

What confirms the hypothesized interest rate sensitivities and shows that the two lines of business are fairly complementary?

Experience refund provisions of group insurance contracts are most often concerned with the manner of distributing any profits between the insurer and the insured group. The agreements usually contain provisions specifying how losses will affect the profit allocations for the insured group. In such situation:

Inflation in Defense & Cost Containment (DCC) is evaluated separately and is estimated to occur at the same rate as the rate of inflation in the losses.

Traditional insurance risks are generally are random and average out over larger populations.

With fixed deferred annuities;

All operations under common control are combined, intercompany balances and transactions are eliminated and the effects of minority interests are recorded through:

Fidelity bonds cover employees against dishonest acts by employees.

The private pools can fall in which two categories:

Insurance agents act as contractors in groups who express one or more entity with express authority to act for the entity in dealing with insureds.

What method assumes that an entity’s historical experience relating to the timeliness of settlement will be predictive of future results?

When policy periods expire, the premiums written are earned and are recognized as:

Direct serving loans method requires a system of good internal control and requires that the functions be split between the Accounting Department and the Investment Department. In such a case the Accounting Department is responsible for all of the following EXCEPT:

The options for securities that insurance entities own and can deliver if the options are exercised by the option buyers are called:

In what, securities involve in repos are not delivered on the settlement date of the agreement and the contract may be extended upon mutual agreement of the buyer-lender and seller-borrower.

Spreading of risks among insurance entities is called:

Which of the following is NOT the interrelated component of internal control?

The maturity of which agreement is fixed by the contract and depends on the needs of the borrower and the willingness of the lender?

The sum of values assigned by claims adjusters to specific known claims that were recorded by the insurance entity but not yet paid at the financial statement date is called:

Which of the following is Correct?

In the NAIC Accounting Practices and Procedures Manual there is limitation on the amount of EDP equipment and operating systems software, that can be shown as admitted assets. Companies are generally limited to of the reporting entity’s capital and surplus, as reported in the financial statement most recently filed with the domiciliary commissioner adjusted to exclude any EDP and operating system software, net deferred tax assets and positive goodwill.

The estimated amount receivable from third parties from whom the insured may have the right to recover damages is known as:

_______ is contractual right of recovery that entitles the insurer to any proceeds from the disposal of damaged property for which the claim has been made.

National Association of Insurance Commissioners stated that, has no effect on the valuation of securities for statutory accounting purposes, provided the amount of the collateral at least equals the required collateral.

What is largely systematic that is; all insured risks are strongly affected by certain common influences, like developments in the capital markets?

Extrapolation of historical dollars, projection of separate frequency data, use of expected loss ratios are all projection methods for:

GAAP have two important functions. First, they provide a set of standards that endeavor to measure with reasonable accuracy the assets held, liabilities owed, revenue earned, and expenses incurred by the company. For life insurance companies these measurement rules have been prescribed specifically for their specialized products. The second important function of GAAP is: