Free CAS Exam 6-U.S. (Regulation and Financial Reporting) Solvency Metrics: RBC & IRIS Practice Questions

Practice 99 free Solvency Metrics: RBC & IRIS questions for CAS Exam 6-U.S. (Regulation and Financial Reporting).

99 Questions

37 Easy

40 Medium

22 Hard

2026 Syllabus

Sample Questions

Question 1 Easy

How are the NAIC IRIS ratio results for a property-casualty insurer produced each year?

Solution

C is correct. The IRIS Ratio Application generates the key financial ratio results from the financial information in insurers' statutory annual financial statements, and the manual notes the ratios and range comparisons are generated automatically upon data submission when all data elements are present. The results feed reports made available to state insurance regulators and are used in determining the level of regulatory attention required.

Question 2 Medium

A property-casualty insurer reports Total Adjusted Capital of $450M and Authorized Control Level RBC of $200M. What is the insurer's RBC ratio?

Solution

A is correct. The RBC ratio equals Total Adjusted Capital divided by Authorized Control Level RBC:

450/200 = 2.25

, or 225%. No action level is triggered on the ratio alone, but a ratio between 200% and 300% places the insurer in the trend-test band: if its current-year combined ratio exceeded 120%, it would be required to comply with Company Action Level requirements despite the 225% RBC ratio.

Question 3 Hard

An insurer reports RBC charges ($ millions) of

R_{0} = 30

R_{1} = 80

R_{2} = 90

R_{3} = 120

R_{4} = 60

R_{5} = 60

and Total Adjusted Capital of $176 million. Which RBC action level applies?

Solution

B is correct. The sum of squares

8 0^{2} + 9 0^{2} + 12 0^{2} + 6 0^{2} + 6 0^{2} = 36, 100

gives a square root of 190, so Total RBC

= 30 + 190 = 220

and Authorized Control Level RBC

= 0.5 \times 220 = 110

. The RBC ratio is Total Adjusted Capital divided by ACL RBC:

176/110 = 1.60

, or 160%. A ratio of at least 150% but below 200% falls in the Company Action Level band, requiring the insurer to submit a corrective RBC plan.

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