Acct 424 Insurance Accounting

Description

Q1. What do you mean by Guaranty Fund and Other Assessments in the insurance industry? Describe with suitable examples the three primary methods used to assess guaranty funds assessments for property and liability insurance firms.

Note: Your answer must include suitable examples for each method.(5 Marks) (Week 10, Chapter 8)

Answer:

Q2. Part a) What are the various transactions involved in Takaful Operations?(2 Marks)

Part b) The following financial transactions are related to a General Takaful Product: (3 Marks)

i.An amount of SAR 15,500 received as advanced contribution from new participants.

ii.An amount of SAR 11,250 received as a contribution from new participants.

iii.Contribution renewal received from participants SAR 13,750.

You are required to prepare the necessary journal entries.(Week 11, Chapter 3)

Answer:

Q3. AT&T Company has the following financial data:(5 marks) (Week 12, Chapter 4)

Particulars	Amounts (SAR)
Total Profit for the Year	86,625
General Takaful Assets (Year 2019)	238,500
General Takaful Assets (Year 2020)	257,625
Cash	31,725
Short-term Investment	33,525
Short term liabilities	42,750
Underwriting Surplus Distributable to Participants/Participants’ Share of Profit	51,825
Gross Contribution	173,700
Net Contribution	129,375
Wakalah Fee	41,625
Commission Paid	34,245
Management Expense	38,700
Net Claim Incurred	73,125
Earned Contribution	124,875

Calculate:

• Return on Assets
• Quick Liquidity
• Surplus Distribution Ratio
• Expense Ratio
• Claims Ratio