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RBC EXAM QUESTIONS AND ANSWERS 2024/2025( A+ GRADED 100% VERIFIED).
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RBC EXAM QUESTIONS AND ANSWERS 2024/2025( A+ GRADED 100% VERIFIED).
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RBCRBC Ratio
TAC / ACL
What is the company action if the RBC ratio is between 100 - 200 %?
- must submit action plan within 45 days to meet RBC standards
- must explain how to do 1 or more of these:
a. increase capital
b. reduce operations
c. reduce risk
- send to commissioner of domiciliary state
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What is the company action if the RBC ratio is between 0 - 100 %?
- no company action is initially required
- in this range, regulators have authority
What must the RBC ratio be for the commissioner to be AUTHORIZED to take
control?
70-100%
, What must the RBC ratio be for the commissioner to be MANDATED to take
control?
<=70%
What is the 'trend test' regarding RBC ratios?
If
- a company's RBC ratio is in the 200-300% range
- and COR > 120%
then they are subject to the CALL action from the action table
What are the four levels of actions dictated by the RBC ratio?
1. Company Action Level (CAL)
2. Regulatory Action Level (RAL)
3. Authorized Control Level (ACL)
4. Mandatory Control Level (MCL)
What is the formula for the 'Combined Operating Ratio' or COR?
COR = L + E + D where
L = company Loss & LAE ratio
E = company expense ratio
D = policyholder dividend ratio
What are the three categories of 'asset risk' in the RBC framework?
Fixed income risk (R1)
Equity risk (R2)
Credit risk (R3)
What are the two categories of 'U/W risk' in the RBC framework?
reserve risk (R4)
NWP risk (R5)
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