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CAS Exam 6 (US) study materials
CAS Exam 6 (US) study resources

CAS Exam 6 (US) cheat sheet

CAS Exam 6 (US) · Keep the key ideas within reach.

Quick reference

Regulation and Financial Reporting (United States)

  • Statutory accounting (SAP) is prescribed by the NAIC and state regulators and emphasizes liquidation-basis solvency; GAAP (US SAP vs. GAAP) emphasizes going-concern matching, so SAP is more conservative and defers fewer acquisition costs.

  • NAIC Annual Statement: insurers file the statutory financial statements (blanks) with the domiciliary state; the Securities and Exchange Commission (SEC) filing for public insurers is Form 10-K, which uses GAAP, not statutory, figures.

  • Risk-Based Capital (RBC): the NAIC RBC formula computes a company action level as a function of the authorized control level (ACL); the company action level is 2.0 times ACL, regulatory action level 1.5 times, authorized control level 1.0 times, mandatory control level 0.7 times.

  • RBC ratio = total adjusted capital / authorized control level risk-based capital; below 200% triggers a company action level event requiring a corrective plan filing with the commissioner.

  • IRIS (Insurance Regulatory Information System) ratios are early-warning tools; unusual values (outside the usual range) flag regulators for review but are not by themselves a finding of insolvency.

  • Statutory surplus = admitted assets minus liabilities; nonadmitted assets (e.g., certain receivables, furniture and equipment, overdue premiums) are excluded, and the change in surplus reconciles to net income plus capital contributions minus dividends and other surplus changes.

  • Dividend restrictions: an insurer may pay an ordinary dividend only up to a state-prescribed limit tied to prior-year net income and surplus; larger (extraordinary) dividends require prior regulatory approval.

  • Guaranty associations fund covered claims of insolvent insurers; property-casualty guaranty funds typically assess solvent member insurers after an insolvency, subject to state caps and recoupment provisions.

  • Reinsurance accounting: ceded reinsurance reduces statutory loss reserves and written premium only if the reinsurer is authorized or the ceding insurer holds collateral (funds withheld or letters of credit) for unauthorized reinsurers.