# ComponentSteps

TEXTFIELD1:
Please discuss how the Company manages the adequacy of its capital position.  

Your answer should address topics such as the following:

the method used to model and plan for capital needs and effectively utilize its capital resources

the extent to which the capital and surplus planning process is integrated into the Company's strategic planning process

the extent to which Senior Management and the Board provide direct oversight to capital and surplus planning decisions

the ability to stress test capital adequacy against various market conditions that could adversely affect 

the Company's capital structure

the Company's prospects and plans for growth and how the Company has managed growth in the past.

the Company's access to capital markets and other sources of capital, including support available from a parent holding company


TEXTFIELD1:
Please discuss how management monitors overall asset quality.

Your answer should address topics such as the following:

asset administration practices

methods used to identify and value of problem,  restructured, delinquent, and nonperforming assets for both on and off-balance-sheet transactions.

monitoring of credit risk arising from or reduced by off-balance-sheet transactions, such as unfunded commitments and lines of credit.

frequency and methods of monitoring of the diversification and quality of investment portfolios by senior management and the Board of Directors.

monitoring the existence of asset concentrations.

the timely identification and collection of problem assets.

how internal controls and information systems support the management of the Company's assets.
cash management practices.

how management determines the continuing ability of its custodians to safeguard and protect company assets.

management review the financial condition of these custodians.


TEXTFIELD1:
Please discuss how the Company manages overall reserve adequacy.

Your answer should address topics such as the following:

          the competency and organization of staff assigned the responsibility of determining and monitoring reserves.
         
          the reserving methodologies used for each major line of business.

         the reserving techniques utilized for new business, primary (direct and assumed) lines of business, ceded and
         discontinued business.

         monitoring of compliance with statutory reserving requirements.

         the types of controls and audits performed to ensure that seriatim reserve listings, policy benefits, and claims and
         claims expense and reserve data are accurate, timely, complete, and effective for the types and volumes of business
         being written, assumed or ceded.

         the timely detection and management reporting of reserve inadequacies.

         Senior Management and the Board establishment/approval of conservative reserving policies.

         the history of changes in the Company's reserving practices over the past 5 years.

            the company's internal policy for addressing environmental impacts on reserves. For example, court cases, etc.


TEXTFIELD1:
Please discuss how the Company manages its reinsurance portfolio.

Your answer should address topics such as the following:

How does management determine if the current reinsurance program is appropriate to the amount of capital and surplus, business growth expectations, and risk appetite of the Company?
 
Is the plan of reinsurance reviewed and approved regularly by the Board of Directors?

How often is the financial strength of the reinsurers reviewed?  Who prepares and reviews any reports generated?
 
the process for documenting and communicating reinsurance arrangements to all affected parts of the Company (i.e. reserve administration, accounting, legal, underwriting).

the underwriting standards, monitoring and management reporting in place for business ceded and assumed. 
the modeling techniques utilized to determine the level of reinsurance protection needed from catastrophic events
the review of reinsurance agreements to assure they meet risk transfer criteria to qualify for reinsurance accounting treatment.

the sufficiency and competency of staff assigned to the responsibility of administering the reinsurance program to include estimation of reserves ceded and assumed, reinsurance contract terms and conditions and the controls and audits surrounding premium, loss, commission, reserve information, and billing and settlement activities with reinsurers, and maintenance of letters of credit, trust account balances, and use of offsets to protect the Company.  

How does the Company ensure that loss portfolio transfer arrangements have sound business rationale and are economically justified?

the system of internal controls built into the reinsurance accounting system.

Describe the Company's procedures for determining that reinsurers are authorized under Minnesota statutes?  How often is that determination reviewed?

Does the Company have a policy to ensure that is has an executed copy of each reinsurance contract?


TEXTFIELD1:
Please discuss Company management.

Your answer should address topics such as the following:

provide a brief biographical summary of the qualifications of each member of the senior management team and the Board of Directors.

the ability of the Board and Senior Management to plan for and respond to risks that may arise from changing business conditions or the initiation of new activities or products.

how affiliate transactions are monitored.

the policies and internal controls that are in place to address operations and risks of significant activities.

the accuracy, timeliness, and effectiveness of management information and risk-monitoring systems in relation to the Company's size, complexity and risk profile.

the effectiveness of the Company's audits and internal controls to promote effective operations and reliable financial and regulatory reporting; safeguard assets; and ensure compliance with laws, regulations, and internal policies.

the policies, procedures and internal contols in place to assure compliance with laws and regulations.

how the Company responses to recommendations from auditors and regulatory authorities.

the depth of management and its succession planning activities.

susceptibility to dominant influence or concentration of authority.

the extent to which the Board is comprised of independent and qualified individuals, commensurate to the size of the Company and its risk profile, and inclusion of outside directors.

how the reasonableness of compensation policies and avoidance of self-dealing is controlled.

the Company's Mission Statement and a policy for ascertaining managements compliance with it.

Senior Management and the Board's understanding of the Company's risk profile and risk management practices.
the extent to which the Company has had financial performance that has been consistent from year to year, and  consistent with that of its peers.

the extent to which the Company has been exposed to internal and/or external fraud.

the extent to which the Company maintains a code of ethics, and the extent to which conflicts of interest are reported  and managed.

the relationship between Senior Management, the Board, the Audit Committee, and the internal and external auditors.

the extent to which the Company has recently experienced downsizing and/or corporate restructurings.


TEXTFIELD1:
Please discuss the profitability of the Company, both in terms of recent history and assumptions for the future

Your answer should address topics such as the following::

the Company's strategy for contributing to surplus via earnings.

management of the quality and sources of earnings and the level of its expenses in relation to operations.

maintenance of pricing discipline and techniques to timely validate premium pricing levels on all direct, assumed and ceded business.

the policies and processes for charging for inter-company service activities.

the extent to which the sources of earnings are diversified.

reliance upon interpretations of accounting and/or actuarial principles to enhance earnings.

the extent have the Company's earnings come from non-recurring sources.

the vulnerability of earnings to competition.

the effect on earnings of an economic downturn or market event.

management of earnings to ensure the long-term viability of its operations.


TEXTFIELD1:
Please discuss the Company's liquidity position, and how it is managed.

Your answer should address the following topics:

methods of monitoring liquidity sources compared with present and future needs and the ability of the Company to meet liquidity needs without adversely affecting its operations or condition.

the extent to which assets are readily convertible to cash without undue loss.
access to capital markets and other secondary sources of funding.

the level of diversification of funding sources both on- and off-balance sheet.

degree of reliance on short-term, volatile sources of funds, including borrowings and institutional deposits, to fund longer-term assets.

the trend and stability of interest and equity sensitive product liabilities.

ability to securitize and sell certain pools of assets.

the policies and procedures used by management to identify, measure, monitor, and control the Company's liquidity position, including the effectiveness of product spread and asset/liability matching management strategies, liquidity policies, management information systems, and contingency funding plans.

management of the level of illiquid affiliated investments.

consideration of asset quality and trends, earnings projections, market conditions, management changes, and other funding needs in establishing the Company's asset/liability matching management strategies.

effectiveness of cash management practices over the last five years.

effectiveness of internal controls over the movement of cash and liquid investments.

process for Senior Management and Board approval of the level and strategy for liquidity risk at the Company.


# TmAuditFlags

DESCRIPT:
Highlight items in cabinet newer than revision date


