Free CAS Exam 6-U.S. (Regulation and Financial Reporting) Annual Statement Schedules & the IEE Practice Questions
Annual Statement schedules and the Insurance Expense Exhibit sit in the Financial Reporting section of CAS Exam 6-U.S. (60-75% of the exam, CAS). Questions test the calculations behind the Underwriting and Investment Exhibit, Schedule F, Schedule P, Statutory Page 14, the Five-Year Historical Data, and the IEE, and what each reveals about an insurer's condition.
88 questions0 easy14 medium74 hard2026 syllabus
Sample Questions
Question 1
Medium
An examiner reviewing a property and casualty insurer's Schedule T finds $4.2 million of direct premiums written allocated to a state in which the company reports no active license. Which interpretation of that entry is most appropriate?
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Correct Answer: D
Solution
D is correct. Schedule T allocates direct premiums written and direct losses paid across states and territories alongside a status indication for each jurisdiction, so premium appearing where the company shows no license is a signal to investigate rather than a finding. An insurer that is not admitted in a state may still write there lawfully as an eligible surplus lines carrier, and certain exempt classes are also permitted, so the examiner's next step is to confirm the company's eligibility or exemption in that jurisdiction. The assumed-business reading fails because Schedule T presents direct writings only. The ceded-reinsurance reading substitutes Schedule F, which reports recoverables and reinsurer authorization, for the geographic allocation of direct business. The producing-agency reading misstates the allocation basis, which follows the jurisdiction of the risk and the policy. The immediate-suspension reading treats a screening flag as a proven violation and skips the graduated intervention sequence a regulator would follow.
Question 2
Hard
A workers compensation insurer's year-end records show direct and assumed nominal loss reserves of $40,000 thousand and ceded loss reserves of $9,000 thousand. A permitted tabular discount of $2,600 thousand applies to its retained indemnity reserves. Its Schedule F computation produces a provision for reinsurance of $1,500 thousand. What total amount do these three items contribute to reported liabilities?
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Correct Answer: C
Solution
C is correct. The loss reserve line is stated net of reinsurance ceded and net of the permitted tabular discount: 40,000−9,000=31,000, then 31,000−2,600=28,400 thousand carried as loss reserves. The provision for reinsurance is not an offset to the reserve; it is a separately reported liability that reduces surplus while the reserve stays at its computed net level, so total liabilities from these items are 28,400+1,500=29,900 thousand. The $26,900 path subtracts the provision from the net reserve as though it were a reserve credit adjustment. The $28,400 path stops at the reserve and omits the provision from liabilities entirely, treating it as a direct charge to surplus with no liability recorded. The $32,500 path adds the provision to $31,000 but never applies the tabular discount. The $38,900 path applies the discount and the provision to the direct and assumed figure without deducting ceded reserves.
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