SOFE-CFE Online Practice Questions and Answers

Reinsurance is the acceptance by one insurer, known as the reinsurer or the ______________, of all or part of the risk of loss of another (the original) insurer, called the _______________.

A. assuming company, insurance company

B. assuming company, ceding company

C. insurance company, assuming company

D. Reimbursement Company, primary company

____________ is the reinsurance of part or all of (the insurance provided by) a single policy, with separate negotiation for each cession.

A. pro rata treaty

B. Facultative

C. aggregate placement

D. None of the above

What are defined as losses paid plus the change (positive or negative) in outstanding loss reserves within a given period of time?

A. Incurred losses

B. reassumed losses

C. ceded losses

D. reinsured losses

The annual reports from certain insurers to their shareholders must conform to specific SEC disclosure requirements. According to the Securities and Exchange Commission (SEC), which of the following information must be provided?

A. selected financial data for the past five years

B. a discussion and analysis by management that includes liquidity

C. financial statements that include income statements, statements of cash flows, and balance sheets

D. All of the above

The perpetrators of which frauds produce false documents that cause the victim company to unwittingly make a fraudulent disbursement?

A. Frequency of fraudulent disbursements

B. Payroll and expense reimbursement schemes

C. Inventory and Purchase reimbursement schemes

D. Sales and Equipment reimbursement schemes

Which of the following is NOT the category of payroll fraud?

A. Ghost employee schemes

B. Falsified hours

C. Invoicing noncompliance vendors' schemes

D. Commission schemes

The heart of which scheme is in the falsification of payroll records and timekeeping information?

A. Falsified hour's scheme

B. timekeeping scheme

C. ghost employee scheme

D. commission disbursement scheme

Which of eth following is NOT the common method for concealing liabilities and expenses?

A. Liability/expense omissions

B. Capitalized expenses

C. Failure to disclose warranty costs and liabilities

D. Management fraud

Changes in the ______________will trigger changes in the size and importance of the supplemental reserve.

A. settlement patterns

B. agent pay program

C. non-litigated claims

D. collateral sources

Stock of a company that has been issued, fully paid for and subsequently reacquired by the company is known as:

A. capital stock

B. treasury stock

C. exchange stock

D. Gain stock

The amount paid plus or minus any premium or discount payment to date to adjust the value to par or face amount by maturity date is known as:

A. amortized cost

B. reimbursement cost

C. neutral cost

D. face value

To qualify as a life insurer for federal income tax purposes, what percent of the mean of the company's reserves must constitute life insurance reserves?

A. 25

B. 50

C. less than 50

D. more than 50

Insurance companies are required to write down all bonds not in good standing to what as assigned values by making charges to their statutory surplus through an entry to change non-admitted assets.

A. Non-admitted reinsurance

B. Securities Valuation Office

C. Mandatory economic benefits

D. Investment reimbursements Office

Under the hedge of a net investment in a foreign operations model, the _____________ is recorded on the balance sheet at fair value with changes in fair value as a component of other comprehensive income

A. derivative

B. adjustment accountability

C. foreign operations

D. company investment

Adjustments to the deposit related to the unexpired portion of the coverage are recorded as an adjustment to incurred losses.

A. True

B. False