SOFE SOFE Certification SOFE-CFE Questions & Answers

• Question 71:

  The base period is defined as:

  A. the most recent 20-calendar-month period ending before the ending of the determination year

  B. the most recent 45-calendar-month period ending before the beginning of the determination year

  C. the most recent 60-calendar-month period ending before the beginning of the determination year

  D. the most recent 65-calendar-month period ending before the ending of the determination year

  Correct Answer: C

• Question 72:

  Spreading the deduction for ultimate incurred losses and loss adjustment expense reserves ("LAE") over a number of years is called:

  A. Inference

  B. Abstraction

  C. Take off

  D. Discounting

  Correct Answer: D

• Question 73:

  The discounted unpaid loss as of the end of any tax year is the present value of losses determined by reference to which of the following factor?

  A. the gross amount

  B. the pattern of claims payments

  C. the rate of interest

  D. All of the above

  Correct Answer: D

• Question 74:

  15 percent of otherwise tax exempt interest income and the dividends received deduction are included in the company's income, in which factor?

  A. Offset property

  B. Colonial act

  C. Proration

  D. reserved act

  Correct Answer: C

• Question 75:

  What begins with gross premiums written and are reduced by return premiums and premiums paid for reinsurance?

  A. Premiums unearned

  B. Premiums earned

  C. Deposited premiums

  D. Reinsured premiums

  Correct Answer: B

• Question 76:

  Written "amounts payable" for insurance coverage are called:

  A. Gross premiums

  B. Net premiums

  C. Deposited premiums

  D. Earned premiums

  Correct Answer: A

• Question 77:

  Premium income is deferred by 80 percent of the increase in the reserve for _________ premiums that applies to the unexpired period of an insurance contract

  A. earned

  B. unearned

  C. obligatory

  D. reserved

  Correct Answer: B

• Question 78:

  Annual Statement methodology should be followed in computing insurance company taxable income except when the tax law does not permit insurers to do so.

  A. true

  B. False

  Correct Answer: A

• Question 79:

  A nonlife insurance company's basic tax formula is roughly equivalent to the standard corporate tax formula, with which of the following insurance specific modifications:

  A. Reserves

  B. Unearned Premium Reserve

  C. Proration

  D. All of the above

  Correct Answer: D

• Question 80:

  Bituminous Casualty Corp. affirmed the propriety of treating what as an unearned premium reserve, which results in the reduction of underwriting income.

  A. retrospective rate credit reserve

  B. prospective rate debt reserve

  C. revolutionary act

  D. treasury credit reserve

  Correct Answer: A