RBC Acronyms
What is RBC?
A. Risk-based Capital
B. Reserve-based Capital
C. Regulatory-based Capital
D. Review-based Capital
A. Risk-based Capital
What is the RBC ratio?
A. A financial valuation ratio used to measure a company's return on investment
B. A ratio of the enterprise value, which is the market capitalization and total debt, to the earnings before interest, taxes, depreciation, and amortization
C. A ratio of capital held by the company to the minimum level of required capital as determined by a prescriptive formula (TAC/RBC)
D. A ratio of capital held from normal business operations to the total amount of liabilities held
C. A ratio of capital held by the company to the minimum level of required capital as determined by a prescriptive formula (TAC/RBC)
As an insurance company, is BHF regulated primarily federally or by state?
A. Federally regulated
B. State regulated
B. State regulated
What do C-0, C-1, C-2, C-3, and C-4 represent?
A. Asset tiers for capital requirements
B. Liability tiers used in the RBC calculation
C. Risk-type categories, which are factors used in the RBC calculation
D. Covariance adjustment used in the RBC calculation
C. Risk-type categories, which are factors used in the RBC calculation
What accounting standards does Brighthouse primarily use to manage its business?
A. Economic- basis accounting
B. GAAP accounting
C. Statutory accounting, which is unusual for a publicly-traded company
D. Statutory accounting, which is normal for a publicly-traded company
C. Statutory accounting, which is unusual for a publicly-traded company
What is PBR?
A. Policyholder behavior
B. Principles based risk
C. Principles based reserve
D. Policy based risk
C. Principles based reserve
Calculate C-1 Pre-tax RBC on the following:
$1,000,000 BB Rated Corporate Bond with a 4% yield, and an RBC Factor of 4.54%
A. $40,000
B. $45,400
C. $1,816
D. $47,216
B. $45,400
Do the regulators ever change the way that RBC is calculated?
A. Yes, it is actively managed and updated annually
B. Yes, it is actively managed and can update it 4 or 5 times a year
C. Yes, it is actively managed but is only updated every 4 to 5 years
D. No, it is not actively managed
B. Yes, it is actively managed and can update it 4 or 5 times a year
What is C-0?
A. Asset Risk
B. Insurance Risk
C. Interest rate and market risk
D. Off-Balance Sheet and Affiliate Risk
D. Off-Balance Sheet and Affiliate Risk
As stated in the 2023 10-k, a decline in RBC ratio could…
A. Limit the ability of an insurance subsidiary to make dividends or distributions
B. Result in a loss of customers or new business
C. Influence ratings agencies to downgrade our financial strength ratings
D. All of the above
D. All of the above
What is TAC?
A. Tangible capital
B. Total Adjusted Capital
C. Total Annualized Capital
D. Total Asset Calculation
B. Total Adjusted Capital
How do you calculate TAC (the total adjusted capital)?
A. Statutory Capital & Surplus + Asset Valuation Reserve (AVR)*
B. Statutory Capital & Surplus*
C. Asset Valuation Reserve + Statutory Capital Surplus*
D. (Statutory Capital & Surplus + Asset Valuation Reserve (AVR)*)/ RBC factors
[* Plus certain other adjustments not significant to BHF]
A. Statutory Capital & Surplus + Asset Valuation Reserve (AVR)*
What does C-2 Insurance Risk include?
A. Macroeconomic risks
B. Liquidity and funding risks
C. Policyholder behavior risks
D. Mortality Risk, Longevity Risk, and Morbidity Risk
D. Mortality Risk, Longevity Risk, and Morbidity Risk
What is C-1?
A. Asset risk- the risk of default or loss in market value on investments
B. Off-balance sheet and Affiliate Risk
C. Interest rate and market risk
D. Business and operational risk
A. Asset risk- the risk of default or loss in market value on investments
How much of a reduction can an insurance company get if they perform actuarial cash flow testing?
A. Up to 5%
B. Up to 10%
C. Up to 25%
D. Up to 50%
D. Up to 50%
What is IMR?
A. Interest Maintenance Risk
B. Investable Mandatory Reserve
C. Investable Mandatory Risk
D. Interest Maintenance Reserve
D. Interest Maintenance Reserve
Calculate the RBC ratio of the following:
Statutory Surplus: $3,500
AVRs: $1,500
RBC: $1,000
A. 150%
B. 200%
C. 350%
D. 500%
D. 500%
If an insurer's RBC falls below certain levels, what are the regulatory action levels ordered from best to worst?
A. Authorized Control Level, Company Action Level, Regulatory Action Level, and Mandatory Control Level
B. Company Action Level, Regulatory Action Level, Authorized Control Level, and Mandatory Control Level
C. Regulatory Action Level, Company Action Level, Authorized Control Level, and Mandatory Control Level
D. Company Action Level, Authorized Control Level, Regulatory Action Level, and Mandatory Control Level
B. Company Action Level, Regulatory Action Level, Authorized Control Level, and Mandatory Control Level
Which is the only RBC category not reduced by reinsurance?
A. C-0 Off-Balance Sheet and Affiliate Risk
B. C-1 Asset Risk
C. C-2 Insurance Risk
D. C-3 Interest Rate and Market Risk
E. C-4 Business and operational risk
E. C-4 Business and operational risk
Variable annuity reserve requirements are found where?
A. Actuarial Guideline 14 and the Valuation Manual Section 21
B. Actuarial Guideline 43 and the Valuation Manual Section 21
C. Actuarial Guideline 53 and the Valuation Manual Section 20
D. Actuarial Guideline 54 and the Valuation Manual Section 20
B. Actuarial Guideline 43 and the Valuation Manual Section 21
What is CRVM?
A. Commissioners Reserve Valuation Method
B. Conference Review Virtual Machine
C. Conference Review Valuation Method
D. Commissioners Reserve Virtual Machine
A. Commissioners Reserve Valuation Method
Calculate the RBC ratio of the following:
Statutory Surplus: $4,623
AVRs: $1,533
TAC: $6,156
RBC: $1,443
A. 408%
B. 418%
C. 428%
D. 478%
C. 428%
What is IMR (interest Maintenance Reserve)?
A. Accounting mechanism that lumps realized gains and losses upfront so they are immediately refelected on the financial statements
B. An RBC factor calculation that removes interest rate gains and losses so they are not considered in the overall RBC calculation
C. Accounting mechanism that spreads out realized gains and losses so they are not immediately reflected in the financial statements
D. An RBC factor calculation that includes interest rate gains and losses so they are considered in the overall RBC calculation
C. Accounting mechanism that spreads out realized gains and losses so they are not immediately reflected in the financial statements
What organization developed the RBC Factors?
A. NAIC- National Association of Insurance Commissioners
B. American Academy of Actuaries
C. Conference of Consulting Actuaries
D. Global Association of Risk Professionals
B. American Academy of Actuaries
What is the standard projection as it relates to Principles Based Reserves?
A. A stochastic scenario projection across multiple capital markets scenarios, taking the average of the worst 30%
B. A stochastic scenario projection across multiple capital markets scenarios, taking the average of the worst 2%
C. A single scenario projection with assumptions prescribed by the NAIC using conservative assumptions
D. A single scenario projection with assumptions prescribed by the NAIC using radical assumptions
C. A single scenario projection with assumptions prescribed by the NAIC using conservative assumptions