AFE Accredited Financial Examiner Question and Answers

When premium income less return premiums arising from policies issued or other contracts entered into reinsure other insurance entities that provide the related primary coverage are called:

It indicates the lender’s commitment to make a loan in accordance with the terms specified either in the borrower’s loan application or in the terms the company approves for the loan.

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.

Subrogation is:

Many companies have developed an asset/liability management approach that is founded on understanding product liabilities. Mortgages meet the primary objective of maintaining:

In a yield-maintenance agreement:

The difference between the purchase price and the repurchase price, or sale price, plus accrued interest on the security represents:

Accounting transactions that occur after the initial investment in a loan and during the period the loan is being serviced fall into two broad categories. Which one of the following is out of those categories?

Dynamic hedging requires that:

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:

A Company’s investments are admitted assets properly valued which support the reserves and liabilities, including required capital and surplus. Many jurisdictions permit companies to make some investments that do not meet all of the strict regulatory requirements. These additional investments are often referred to as basket assets. Which of the following is/are true for Basket assets?

is provided by original documents is more reliable than audit evidence provided by photocopies or facsimiles.

The market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability is known as:

What is the act in which the main sections are for Canadian companies and for foreign companies?

Which of the following id NOT the kind of Insurance?

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date is called:

The approach in which the investment policy should “identify acceptable ranges for investments in different types of instruments, including cash, equities, bonds and debentures, and real property is known as:

Insurance policies may be classified in which of the following categories?

In _______________, an adjustment is based on experience of an individual risk during the term of the policy and is generally subject to maximum and minimum premium limits specified in the policy.

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:

Special surplus funds are portions of surplus allocated or appropriated for a specific purpose. Special surplus funds usually are allocated voluntarily but also may be required by an insurance regulator. Which one the following is NOT an example of special funds:

The ten largest companies account for what percent of life insurance sales in Canada?

The method used to account for insurance and reinsurance contracts that do not transfer insurance risk is referred to as:

What give the issuer the right to retire the bond at certain times, typically if prevailing market interest rates fall below the rate on the bond?

Home office record-maintenance methods may include:

Schedule H retains the identity of the Group Accident and Health and the Credit Accident and Health lines of business. However, in Schedule H the line of business designated as Other Accident and Health is subdivided to identify individual policies or elective options. Which of the following is/are out of those classifications?

An attitude that includes a questioning mind and a critical assessment of audit evidence is called:

A basic premise underlying the application of is that it is reasonable to assume that plausible relationships among data exist and continue in the absence of known conditions to the contrary.

Financial statements of a self-sustaining foreign operation are translated using the current rate method whereby assets and liabilities are translated in the reporting currency using the exchange rate.

With which standard, the auditor’s substantive procedures must include reconciling the financial statements to the accounting records and should include examining material adjustments made during the course of preparing the financial statements.

Selling a stream of contingent revenues to another party, at a discount to the expected value is called:

________ allow investments to be made, up to a certain percent of invested or total admitted assets, in assets that do not otherwise meet regulatory requirements. If their domiciliary jurisdiction regulations have a this, a life insurer with a business purpose for doing so can make a limited amount of mortgage loans that do not meet regulatory requirements without a reduction in surplus. However, some jurisdictions do exercise some extraterritorial jurisdiction related to it.

It is defined as a debt restructuring whereby the insurer for economic or legal reasons related to borrower financial difficulties, grants a concession to the debtor that it would not otherwise grant.

A liability for premiums paid in advance can also arise when insurers allow policyholders to pay several years’ premiums at one time. Since the insurer has the use of policyholder funds that are not yet due, it is customary for the insurer to:

Which of the following is the significant requirement for ongoing regulatory reporting to the Office of the Superintendent of Financial Institutions (“OSFI”)?

_________________ is a special variation on a second mortgage. In this form, the new lender assumes the original or first mortgage and has the responsibility of collecting all payments and remitting a portion of these payments to the first lender.

Liabilities are recognized for known claims when sufficient information has been developed to indicate the involvement of a specific insurance policy.

Admitted assets are those specifically prescribed by the NAIC Accounting Practices and Procedures Manual or prescribed or permitted by the various jurisdictions. An admitted asset is defined as having probable future economic benefits. It also has three essential characteristics. Which one of the following is out of those characteristics?

A company that has its loans serviced, for whatever reason, is usually charged a servicer’s fee. This fee is usually expressed: