CAS Exam 2025 With 100% Correct
Answers
Risk Margin - CORRECT ANSWER✔✔A provision for uncertainty in an unpaid claim estimate
Unpaid claim estimate - CORRECT ANSWER✔✔The actuary's estimate of the obligation for
future payment resulting from claims due to past events. For clarity and unless otherwise
indicated, this
estimate is on an undiscounted basis
NAIC - CORRECT ANSWER✔✔an organization of regulators that coordinates governance. The
NAIC itself is not a regulator so its laws are not in fact laws. States have the option of whether or
not to adopt them.
Codification of SAP - CORRECT ANSWER✔✔Adopted by NAIC on 1/1/01. This is a set of
accounting principles for insurance companies. These can provide an early warning of
impending financial problems to protect policyholders. Insurers still have to follow GAAP rules
as well.
Government accounting standards board (GASB) - CORRECT ANSWER✔✔This provides
accounting rules for the public sector
Actuaries Involvement with the income statement - CORRECT ANSWER✔✔Estimating the
amount and timing of the loss payments
Liquidation vs going concern - CORRECT ANSWER✔✔Investors view the company as a going
concern while regulators view the company from a liquidation scenario.
,Fair value versus historical cost - CORRECT ANSWER✔✔Fair value: value if traded at in the open
market
Historical cost: Purchase price less depreciation
Annual Statement (the "Blank") - CORRECT ANSWER✔✔a publicly available document that
reports the financial results to the state regulators in the IS. It is developed an maintained by
the NAIC and is adopted by all states.
Jurat Page - CORRECT ANSWER✔✔First page of the annual statement that contains basic
information about an insurer including its name, NAIC code, Address, name & title of preparer,
Officers.
Actuaries involvement in the creation & use of the balance sheet - CORRECT
ANSWER✔✔Actuaries play a big role in determining the reserves. The balance sheet provides
some of the data used to assess the adequacy of capital.
Admitted vs. Nonadmitted assets - CORRECT ANSWER✔✔Non admitted assets are not easily
converted into cash to satisfy the insurers liabilities. They are not included in the surplus
Schedule D - CORRECT ANSWER✔✔Contains details of the stocks and bonds held by the insurer
Schedule A - CORRECT ANSWER✔✔Contains details of real estate transactions and holdings.
Valuation rules in Schedule A depend on the type of real estate: - CORRECT
ANSWER✔✔Properties occupied by the company:
Depreciated Cost - Encumbrances
Properties held for production of income:
Depreciated Cost - Encumbrances
Properties held for sale: min(Depreciated cost - Encumbrances, Fair Value)
,Encumbrances - CORRECT ANSWER✔✔Amount owed on real estate (like mortgage payments)
Cash Schedules - CORRECT ANSWER✔✔Schedule E-1:Contain cash Details
Schedule E-2: Contains cash equivalents (maturity under 3 months)
Schedule DA: contains short term investments (maturity under a year)
Uncollected Premiums & Agents Balances - CORRECT ANSWER✔✔Balances due before the
financial statement date. Premium that is over 90 days overdue is nonadmitted. The insurer
should treat all premium that it believes it will not collect as bad debt.
Deferred Premiums - CORRECT ANSWER✔✔Balances due after the financial date
Amounts recoverable from reinsurers - CORRECT ANSWER✔✔The balances due from reinsurers
for the losses that have been paid by the insurer. Doesn't include amounts due on unpaid
losses.
Schedule F - CORRECT ANSWER✔✔Contains details on prospective reinsurance transactions
Two most common sources of Deferred Tax Assets - CORRECT ANSWER✔✔1. Loss reserves are
discounted in tax accounting but not in SAP accounting
2. Carryforward net operating losses from prior years: this occurs when the insurer has net
operating losses in one year and expects these to offset future gains and therefore future taxes
Users should be concerned if an insurer has significant amounts of receivables from Parent,
Subsidiary & Affiliates - CORRECT ANSWER✔✔These are not as liquid as other assets
Examples of Nonadmitted assets - CORRECT ANSWER✔✔1.Investments that exceed state
limitations
, 2.Furniture equipment and supplies
3.balances due from an agent from sale of a security over due by over 15 days from settlement
4. 10% of deductubles recoverable in excess of collateral.
5. Funds held at a reinsured company that exceed the associated liabilities
6. DAC
Segments of unearned premium reserve: - CORRECT ANSWER✔✔1. Amount unearned (1 yr or
less from the effective date of the policy)
2. Amount unearned over 1 yr from eff. date of the policy
3. Earned but unbilled premiums (EBUB) arise from policies that are subject to exposure audit
4. Reserves for rate credits and retrospective adjustments based on experience
Monthly pro rata method of calculating unearned premiums - CORRECT ANSWER✔✔1/24 is
earned in the month premium is written
1/12 is earned over the next 11 months
1/24 is earned the following month
premium deficiency reserve - CORRECT ANSWER✔✔A separate liability that the insurer needs
to create if the premium is insufficient to cover losses, expenses and other costs
Par value of a stock - CORRECT ANSWER✔✔The minimum amount set by the insurer at which
the stock can trade at its initial offering
Gross paid in & Contributed Surplus - CORRECT ANSWER✔✔This is generated when the insurer
issues stock. I equals the excess of the sale price of stock over its par value.
Unassigned funds in Equity statement - CORRECT ANSWER✔✔This results from the contribution
of retained earnings to surplus
Answers
Risk Margin - CORRECT ANSWER✔✔A provision for uncertainty in an unpaid claim estimate
Unpaid claim estimate - CORRECT ANSWER✔✔The actuary's estimate of the obligation for
future payment resulting from claims due to past events. For clarity and unless otherwise
indicated, this
estimate is on an undiscounted basis
NAIC - CORRECT ANSWER✔✔an organization of regulators that coordinates governance. The
NAIC itself is not a regulator so its laws are not in fact laws. States have the option of whether or
not to adopt them.
Codification of SAP - CORRECT ANSWER✔✔Adopted by NAIC on 1/1/01. This is a set of
accounting principles for insurance companies. These can provide an early warning of
impending financial problems to protect policyholders. Insurers still have to follow GAAP rules
as well.
Government accounting standards board (GASB) - CORRECT ANSWER✔✔This provides
accounting rules for the public sector
Actuaries Involvement with the income statement - CORRECT ANSWER✔✔Estimating the
amount and timing of the loss payments
Liquidation vs going concern - CORRECT ANSWER✔✔Investors view the company as a going
concern while regulators view the company from a liquidation scenario.
,Fair value versus historical cost - CORRECT ANSWER✔✔Fair value: value if traded at in the open
market
Historical cost: Purchase price less depreciation
Annual Statement (the "Blank") - CORRECT ANSWER✔✔a publicly available document that
reports the financial results to the state regulators in the IS. It is developed an maintained by
the NAIC and is adopted by all states.
Jurat Page - CORRECT ANSWER✔✔First page of the annual statement that contains basic
information about an insurer including its name, NAIC code, Address, name & title of preparer,
Officers.
Actuaries involvement in the creation & use of the balance sheet - CORRECT
ANSWER✔✔Actuaries play a big role in determining the reserves. The balance sheet provides
some of the data used to assess the adequacy of capital.
Admitted vs. Nonadmitted assets - CORRECT ANSWER✔✔Non admitted assets are not easily
converted into cash to satisfy the insurers liabilities. They are not included in the surplus
Schedule D - CORRECT ANSWER✔✔Contains details of the stocks and bonds held by the insurer
Schedule A - CORRECT ANSWER✔✔Contains details of real estate transactions and holdings.
Valuation rules in Schedule A depend on the type of real estate: - CORRECT
ANSWER✔✔Properties occupied by the company:
Depreciated Cost - Encumbrances
Properties held for production of income:
Depreciated Cost - Encumbrances
Properties held for sale: min(Depreciated cost - Encumbrances, Fair Value)
,Encumbrances - CORRECT ANSWER✔✔Amount owed on real estate (like mortgage payments)
Cash Schedules - CORRECT ANSWER✔✔Schedule E-1:Contain cash Details
Schedule E-2: Contains cash equivalents (maturity under 3 months)
Schedule DA: contains short term investments (maturity under a year)
Uncollected Premiums & Agents Balances - CORRECT ANSWER✔✔Balances due before the
financial statement date. Premium that is over 90 days overdue is nonadmitted. The insurer
should treat all premium that it believes it will not collect as bad debt.
Deferred Premiums - CORRECT ANSWER✔✔Balances due after the financial date
Amounts recoverable from reinsurers - CORRECT ANSWER✔✔The balances due from reinsurers
for the losses that have been paid by the insurer. Doesn't include amounts due on unpaid
losses.
Schedule F - CORRECT ANSWER✔✔Contains details on prospective reinsurance transactions
Two most common sources of Deferred Tax Assets - CORRECT ANSWER✔✔1. Loss reserves are
discounted in tax accounting but not in SAP accounting
2. Carryforward net operating losses from prior years: this occurs when the insurer has net
operating losses in one year and expects these to offset future gains and therefore future taxes
Users should be concerned if an insurer has significant amounts of receivables from Parent,
Subsidiary & Affiliates - CORRECT ANSWER✔✔These are not as liquid as other assets
Examples of Nonadmitted assets - CORRECT ANSWER✔✔1.Investments that exceed state
limitations
, 2.Furniture equipment and supplies
3.balances due from an agent from sale of a security over due by over 15 days from settlement
4. 10% of deductubles recoverable in excess of collateral.
5. Funds held at a reinsured company that exceed the associated liabilities
6. DAC
Segments of unearned premium reserve: - CORRECT ANSWER✔✔1. Amount unearned (1 yr or
less from the effective date of the policy)
2. Amount unearned over 1 yr from eff. date of the policy
3. Earned but unbilled premiums (EBUB) arise from policies that are subject to exposure audit
4. Reserves for rate credits and retrospective adjustments based on experience
Monthly pro rata method of calculating unearned premiums - CORRECT ANSWER✔✔1/24 is
earned in the month premium is written
1/12 is earned over the next 11 months
1/24 is earned the following month
premium deficiency reserve - CORRECT ANSWER✔✔A separate liability that the insurer needs
to create if the premium is insufficient to cover losses, expenses and other costs
Par value of a stock - CORRECT ANSWER✔✔The minimum amount set by the insurer at which
the stock can trade at its initial offering
Gross paid in & Contributed Surplus - CORRECT ANSWER✔✔This is generated when the insurer
issues stock. I equals the excess of the sale price of stock over its par value.
Unassigned funds in Equity statement - CORRECT ANSWER✔✔This results from the contribution
of retained earnings to surplus
