Apex Insurance Company Wrote a Large Number of Property Insurance

question 16

Multiple Choice

Apex Insurance Company wrote a large number of property insurance policies in an area where earthquake losses could occur.When the president of Apex was asked if she feared that a severe earthquake might put the company out of business,she responded,"Not a chance.We transferred most of that risk to other insurance companies." An arrangement by which an insurer that initially writes insurance transfers to another insurer part or all of the potential losses associated with such insurance is called

• A)hedging.
• B)speculating.
• C)reinsurance.
• D)loss avoidance.

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Definitions:

Non-controlling Interest

The share of ownership in a subsidiary that doesn't belong to the parent company.

Consolidated Balance Sheet

A financial statement that combines the assets, liabilities, and equity of a parent company and its subsidiaries, presenting them as a single economic entity.

Cost Method

An accounting approach where investments are recorded at their original purchase cost, only adjusting for impairment or sale.

Intercompany Sales

Transactions involving the exchange of goods or services between entities within the same parent company.