Reserving Liabilities Involves the Calculation of the Amount That the Insurer

question 14

Multiple Choice

Reserving liabilities involves the calculation of the amount that the insurer needs to set aside to pay future claims.The investment side includes decisions about asset allocation to achieve the best rate of return on the assets entrusted to the insurer by the policyholders seeking the security.The allocation of assets is necessary to meet the timing of the claims obligations.This activity is called:

• A)gentrification.
• B)due diligence.
• C)redlining.
• D)asset-liabilities matching.
• E)blockbusting.

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Definitions:

Revenue Test

An accounting principle used to determine when revenue should be recognized in the financial statements, typically requiring that revenue is earned and measurable.

Reportable Segments

Portions of a business that can be separately reported due to their significant activities, differing from other parts of the company, often requiring disclosure under financial regulations.

Interim Financial Statements

Financial reports covering a period shorter than a fiscal year, providing a view of a company's financial health in mid-year.

Public Companies

Companies that have issued securities through an initial public offering and are traded on at least one stock exchange or in the over-the-counter market.