Actuarial Notes

Exam 6U

The United States Regulation and Financial Reporting Exam 6U is a 4-hour computer-based exam testing knowledge of Insurance Regulation, Statutory Accounting, and the professional responsibilities of the Appointed Actuary in the context of U.S. property and casualty insurance.

Learning Objectives

A. United States Laws and Regulations (10–20%) Candidates navigate Insurance Regulation required by governmental agencies overseeing insurers, including the dual U.S. state and federal regulatory system, Rate Regulation, Solvency Regulation, Antitrust Law, Risk-Based Capital, and Tort Law.

  1. Describe the historic development and the current state of Insurance Regulation and governance.
  2. Discuss the historic development of Solvency Regulation; describe current programs used to monitor solvency.
  3. Describe the current state of insurance regulation (e.g., Sarbanes-Oxley, Dodd-Frank) and how current regulations address specialized insurance topics (e.g., Excess and Surplus Lines, Credit-Based Insurance Scoring, Risk Retention Groups).
  4. Discuss current programs used to monitor solvency (RBC).
  5. Describe regulation related to emerging issues (e.g., Price Optimization models, Predictive Analytics).
  6. Discuss trends in Tort Litigation (e.g., Tort Reform, Nuclear Verdicts, class action suits) and types of litigation costs.
  7. Describe ways in which Latent Liability (e.g., mass torts like Asbestos) can affect P/C insurance companies.

Readings: AAA Retained Risk · CASTF Predictive Models · CAS Financial Reporting · Cole and Marzen · Emmanuel · Feldblum (Rating Agencies) · FIO Report · Kucera · McCarty · NAIC APPM Preamble · NAIC IRIS · NAIC Price · NAIC RRG · NAIC Solvency Regulatory Framework · Porter 1 · Porter 2 · Vaughn

B. Government Programs (5–15%) Candidates identify major U.S. insurance programs administered by government agencies and industry organizations, understanding objectives, operations, and effectiveness of programs such as Automobile Plans, Crop Insurance, Flood Insurance, TRIA, FHCF, Guaranty Funds, Residual Markets, and Workers Compensation.

  1. Describe the purpose of government and industry insurance programs.
  2. Describe the operations and Risk Transfer process for government/industry programs and their interaction with voluntary private insurance sector.
  3. Evaluate the effectiveness of a government/industry program.

Readings: Cook · FHCF Annual Report · Government Insurers Study Note · Horn & Webel · Porter 2 · Webel

C. Financial Reporting and Professional Responsibilities of the Actuary (60–75%) Candidates apply detailed knowledge of the NAIC Annual Statement, Insurance Expense Exhibit, SAP, GAAP, and IFRS, as well as the statutory requirements of the Appointed Actuary and professional standards issued by the American Academy of Actuaries.

  1. Describe the primary financial statements (i.e., Balance Sheet, Income Statement, Cash Flow Statement, Capital and Surplus, notes to financial statements).
  2. Differentiate the primary financial statements under SAP, GAAP, and IFRS.
  3. Use the annual statement schedules, Insurance Expense Exhibit, RBC, IRIS Ratios, and SAO to evaluate the financial health of an insurance entity.
  4. Differentiate between various accounting reporting principles and standards (e.g., SAP, GAAP).
  5. Explain the responsibilities of an actuary as defined by the Actuarial Standards of Practice, regulators, and insurance laws for financial reporting.
  6. Explain the responsibilities of the Appointed Actuary in regard to a Statement of Actuarial Opinion, Actuarial Opinion Summary, and actuarial report.
  7. Identify and propose language for sections of the Statement of Actuarial Opinion.
  8. Use Schedule P data in support of a SAO.
  9. Create an Actuarial Opinion Summary.
  10. Discuss and calculate specific elements of income tax and evaluate their implications for a property/casualty insurer (discounting).

Readings: 2025 IEE · AAA Materiality · AAA Retained Risk · ASOP 20 · ASOP 36 · ASOP 41 · ASOP 43 · Brandt & Maxwell · CAS Financial Reporting · COPLFR P&C Practice Note · Feldblum (Surplus) · NAIC Annual Statement · NAIC Annual Statement Examples · NAIC APPM Preamble · NAIC IRIS · NAIC Solvency Regulatory Framework · NAIC SSAP 5R · SSAP 9 · SSAP 53 · SSAP 55 · SSAP 62R · SSAP 63 · SSAP 65

D. Reinsurance Accounting Principles (5–10%) Candidates use Reinsurance Accounting terminology and practice, including evaluating risk transfer, Commutations, and the financial statement impact of reinsurance strategies.

  1. Describe Reinsurance Accounting and its impact on financial statements.
  2. Evaluate whether a contract qualifies for Insurance Accounting treatment or deposit treatment.
  3. Describe the accounting and tax treatments of Commutations.
  4. Evaluate the effectiveness of reinsurance strategies based on the impact to the financial statements and key financial metrics.
  5. Evaluate the health of an insurance entity using Schedule F.

Readings: AAA CECL · ASC 944-020-15 · Cedar & Thompson · Freihaut & Vendetti · Klann · NAIC SSAP 62R · NAIC SSAP 66

Source Material

Source Material

  • Actuarial Standard of Practice No. 20 Discounting of Property Casualty Claim Estimates (ASB - 2023)
    • C6, C7
  • Actuarial Standard of Practice No. 36 Statements of Actuarial Opinion on P&C Loss Reserves (ASB - 2024)
    • C7
  • Actuarial Standard of Practice No. 41 Actuarial Communications (ASB - 2010)
    • C6
  • ASOP 43 - Property Casualty Unpaid Claim Estimates (ASB - 2007)
    • C6
  • Estimating the Uncollectible Reinsurance Reserve for PC Companies New GAAP Requirements (AAA - 2019)
    • D1, D3–D4
  • Retained Property Casualty Insurance Related Risk Interaction of Actuarial Analysis and Accounting (AAA - 2018)
    • C4, C7
  • Materiality Concepts on Professionalism (AAA - 2006)
    • C7
  • Risk of Material Adverse Deviation Study Note (Brandt & Maxwell - 2023)
    • C7
  • Regulatory Review of Predictive Models White Paper (CASTF - 2020)
    • A5
  • Reinsurance Accounting and Strategy for the Actuary (Cedar & Thompson - 2020)
    • D1, D4
  • Nuclear Verdicts Tort Liability and Legislative Responses (Cole & Marzen - 2023)
    • A3, A6–A7
  • Statements of Actuarial Opinion on Property and Casualty Loss Reserves Practice Note (COPLFR - 2024)
    • C5–C9
  • Personal Insurance (Cook - 2013)
    • B1–B3
  • 2024 Excess and Surplus Lines Laws Manual (Emmanuel & Lerner - 2024)
    • A3
  • Annual Report on the Insurance Industry Dodd-Frank (FIO - 2024)
    • A3
  • Rating Agencies (Feldblum - 2011)
    • A2
  • Statutory Surplus Computation Pricing and Valuation (Feldblum - 2003)
    • C1–C2
  • Accounting Standards Codification 944 Financial Guarantee Insurance Contracts (FASB - 2011)
    • D2
  • FHCF 2024 Annual Report (SBA Florida - 2024)
    • B1–B3
  • Common Pitfalls and Practical Considerations in Risk Transfer Analysis (Freihaut & Vendetti - 2009)
    • D2
  • Government Insurers Study Note
    • B1–B3
  • Private Flood Insurance and the National Flood Insurance Program (Horn & Webel - 2023)
    • B1–B3
  • Reinsurance Commutation (Klann - 2013)
    • D3
  • NAIC Public Hearing on Credit-Based Insurance Scores (Kucera - 2009)
    • A3
  • Testimony on the Impact of Credit-Based Insurance Scoring (McCarty - 2008)
    • A3
  • 2025 Annual Statement Instructions Insurance Expense Exhibit (NAIC - 2025)
    • C3
  • The U.S. National State-Based System of Insurance Regulation and the Solvency Modernization Initiative (NAIC - 2013)
    • A2, A4, C3
  • Accounting Practices and Procedures Manual Preamble (NAIC - 2025)
    • A2, C2, C4
  • SSAP 5R Liabilities Contingencies and Impairment of Assets (NAIC - 2024)
    • C1–C2
  • SSAP 9 Subsequent Events (NAIC - 2024)
    • C5
  • SSAP 53 Property Casualty Contracts Premiums (NAIC - 2024)
    • C1–C7
  • SSAP 55 Unpaid Claims Losses and Loss Adjustment Expenses (NAIC - 2024)
    • C1–C2
  • SSAP 62R Property and Casualty Reinsurance (NAIC - 2024)
    • C1–C2, D2–D3, D5
  • SSAP 63 Underwriting Pools (NAIC - 2024)
    • C1–C2
  • SSAP 65 Property and Casualty Contracts (NAIC - 2024)
    • C1–C2
  • SSAP 66 Retrospectively Rated Contracts (NAIC - 2024)
    • D2
  • NAIC Insurance Regulatory Information System IRIS Ratios Manual (NAIC - 2024)
    • A2, C3, C7
  • Official 2024 NAIC Annual Statement Blanks Property and Casualty (NAIC - 2024)
    • C1–C2
  • NAIC Annual Statement Examples Allstate Liberty Mutual (NAIC - 2024)
    • C1
  • Price Optimization White Paper (NAIC - 2015)
    • A5
  • Risk Retention Groups (NAIC - 2023)
    • A3
  • Financial Reporting Through the Lens of a Property Casualty Actuary (Odomirok et al. - 2020)
    • A2, C1–C7, C9–C10
  • Insurance Regulation Chapters 2-8 (Porter - 2008)
    • A1–A2
  • Insurance Regulation Chapter 12 (Porter - 2008)
    • A2, B1
  • The Economic Crisis and Lessons from U.S. Insurance Regulation (Vaughn - 2009)
    • A2, A4
  • Terrorism Risk Insurance Overview and Issue Analysis (Webel - 2019)
    • B1–B2