Overview
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