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Actuarial Examinations · GH 201-U

SOA Valuation and Regulation - United States Examination Practice Test

The SOA Valuation and Regulation – United States Examination practice material focuses on U.S. insurance financial reporting and regulatory oversight. Its question vocabulary includes statutory balance-sheet treatment, admitted assets, insurer surplus, risk-based capital, reinsurance recoverables, investment valuation, and consumer-protection responsibilities.

Exam overview

Exam providerSociety of Actuaries
Exam codeGH 201-U
CategoryActuarial Examinations

About the SOA Valuation and Regulation - United States Examination Exam

Questions in this practice bank call for interpreting statutory financial information and recognizing how regulatory safeguards apply to insurers. Work through distinctions such as an asset’s admission and balance-sheet treatment, the year-end measurement date, and the implications of a change in surplus. Reinsurance scenarios require attention to whether a recoverable may be collected, especially when a reinsurer is financially troubled. Investment questions connect interest-rate sensitivity with market risk and ask how publicly traded common stock is generally valued under statutory accounting. Other scenarios test the purpose of risk-based capital, the documentation that supports a valuation-process change, and the steps that help make a regulatory filing complete and internally consistent. Consumer-protection questions require identifying the regulator’s role when policyholders report claims-handling concerns.

Sample Practice Questions

Review a selection from this exam's published US Practice Tests practice bank.

Question 1

A regulator receives a complaint alleging that an insurer failed to pay a valid claim promptly. Which action is most consistent with the regulator’s consumer-protection role?

  1. AReview the complaint and relevant records to determine whether applicable claims-handling requirements were followed
  2. BAutomatically order payment without reviewing the policy or claim facts
  3. CSet a new premium for the policyholder’s next renewal
  4. DRequire the insurer to deny all similar claims until the review is complete
Show answerCorrect answer: A

A regulator may investigate complaints and review relevant records to assess compliance with claims-handling requirements. The investigation should consider the policy terms and facts rather than assume either payment or denial is appropriate.

Question 2

An insurer has a ceded reinsurance recoverable from a financially troubled reinsurer. Which valuation concern is most directly relevant?

  1. AWhether the recoverable is likely to be collected, including the effect of applicable credit risk and security arrangements.
  2. BWhether the original policyholder paid premiums by check or electronic transfer.
  3. CWhether the insurer’s marketing materials used the reinsurer’s name.
  4. DWhether the ceded policy was issued in the same calendar quarter.
Show answerCorrect answer: A

A reinsurance recoverable represents amounts expected from the reinsurer, so collectibility and credit exposure are central valuation considerations. Collateral, dispute status, and applicable statutory requirements can affect the assessment.

Question 3

An insurer acquires a bond that meets the criteria for treatment as an admitted asset under applicable statutory rules. What is the most appropriate general description of its balance-sheet treatment?

  1. AIt is excluded from assets because all invested assets are nonadmitted
  2. BIt is recorded as an admitted asset, subject to applicable valuation and reporting rules
  3. CIt is recorded as a liability until it matures
  4. DIt is recognized only when interest is collected
Show answerCorrect answer: B

An asset that qualifies for admission is included in statutory assets, with its reported value determined under the relevant statutory valuation and reporting requirements. Admission does not mean that every asset is automatically valued at its purchase price.

Question 4

An insurer prepares a statutory financial statement for a specified year-end. Which date generally determines the point in time represented by its balance sheet?

  1. AThe date the statement is submitted to regulators
  2. BThe final day of the reporting period
  3. CThe date the external auditor signs its report
  4. DThe date the insurer’s annual meeting is held
Show answerCorrect answer: B

A balance sheet reports financial position as of a particular date, ordinarily the end of the reporting period. The filing or audit date does not change the balance-sheet date, though later information may be relevant under applicable reporting guidance.

Question 5

What is the primary function of a risk-based capital (RBC) framework for insurers?

  1. ATo prescribe the price of every insurance contract
  2. BTo relate capital requirements to the risks an insurer bears and provide regulatory intervention thresholds
  3. CTo guarantee that an insurer will never become insolvent
  4. DTo determine the insurer’s federal income tax rate
Show answerCorrect answer: B

RBC frameworks relate required capital to categories of risk and use specified thresholds to help identify insurers that may require regulatory attention. RBC is a monitoring and intervention tool, not a guarantee against insolvency.

Question 6

When reviewing a proposed change to an insurer’s valuation process, which documentation is most useful for later review?

  1. AThe change rationale, affected methods or assumptions, approvals, implementation date, and observed effects
  2. BA brief note stating only that the process is now more efficient
  3. CA list of employees who attended the implementation meeting, with no description of the change
  4. DA copy of the final reported amount without calculation support
Show answerCorrect answer: A

A clear record of why the change was made, what it affected, who approved it, when it was implemented, and its effects supports reproducibility and oversight. A reported amount alone does not explain the process that produced it.

Question 7

An insurer reports a negative change in surplus during the year. Which interpretation is most appropriate?

  1. AThe reported change reflects the net effect of relevant income, expense, and other recognized movements under the applicable accounting basis.
  2. BThe insurer necessarily paid every policy claim during the year.
  3. CThe insurer must have issued no new policies.
  4. DThe insurer’s assets must all be inadmissible.
Show answerCorrect answer: A

A change in surplus reflects the combined effects of recognized financial activity and other applicable adjustments. A decline alone does not establish that all claims were paid, that no policies were issued, or that all assets are inadmissible.

How to use this practice test

Access is free. A session presents up to 20 random questions from the 50-question practice bank, and results appear after the session. Use missed or uncertain answers to identify whether you need to revisit statutory asset treatment, capital oversight, valuation controls, or regulatory responsibilities.

Preparation tips

  • For each asset scenario, distinguish statutory admission from valuation and identify the balance-sheet consequence described.
  • Practice explaining how a troubled reinsurer affects the assessment of a ceded recoverable and the insurer’s reported position.
  • Compare risk-based capital’s supervisory purpose with surplus reporting; do not treat the two measures as interchangeable.
  • For valuation-process changes, identify records that establish the rationale, approval, implementation, and review trail.
  • When reviewing a statutory filing scenario, check for consistent reporting dates, complete supporting information, and reconciled figures.
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