Investment of Insurance Companies And IRDA Regulations MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Investment of Insurance Companies And IRDA Regulations, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Investment of Insurance Companies And IRDA Regulations MCQs are designed to help you grasp the core concepts and excel in solving problems.

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Investment of Insurance Companies And IRDA Regulations MCQs | Page 15 of 16

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Q141.
How is exposure to a public limited 'Infrastructure Investee Company' determined for equity investments?

a.

20% of outstanding equity shares (face value)

b.

20% of outstanding equity shares plus free reserves

c.

20% of outstanding equity shares or 20% equity plus free reserves (excluding revaluation reserves) plus debentures/bonds, whichever is lower

d.

25% of outstanding equity shares

Discuss
Answer: (c).20% of outstanding equity shares or 20% equity plus free reserves (excluding revaluation reserves) plus debentures/bonds, whichever is lower Explanation:Exposure to a public limited 'Infrastructure Investee Company' for equity investments is determined as 20% of outstanding equity shares (face value) or 20% of outstanding equity shares plus free reserves (excluding revaluation reserves) plus debentures/bonds, whichever is lower.
Q142.
Under what conditions can an insurer invest a maximum of 20% of the project cost of a Public Limited Special Purpose Vehicle (SPV) engaged in the Infrastructure sector?

a.

If the investment is in equity

b.

If the parent company guarantees the entire debt extended and the interest payment of SPV

c.

If the parent company has a rating of less than AA

d.

If the Net worth of the parent company is less than Rs. 500 crores

Discuss
Answer: (b).If the parent company guarantees the entire debt extended and the interest payment of SPV Explanation:An insurer can invest a maximum of 20% of the project cost of a Public Limited Special Purpose Vehicle (SPV) engaged in the Infrastructure sector if the investment is in debt and the parent company guarantees the entire debt extended and the interest payment of SPV.
Q143.
What is a requirement for the guarantee provided by the parent company for investments in a Public Limited Special Purpose Vehicle (SPV)?

a.

The guarantee should exceed 20% of the Net worth of the parent company

b.

The guarantee should not exceed 20% of the Net worth of the parent company

c.

The guarantee should be equivalent to the Net worth of the parent company

d.

The guarantee is not required for such investments

Discuss
Answer: (b).The guarantee should not exceed 20% of the Net worth of the parent company Explanation:The guarantee provided by the parent company for investments in a Public Limited Special Purpose Vehicle (SPV) should not exceed 20% of the Net worth of the parent company, including existing guarantees, if any.
Q144.
What is the maximum limit for investments in securitised assets (Mortgage Backed Securities, Asset Backed Securities, Security Receipts) for life insurance companies?

a.

5% of Investment assets

b.

10% of Investment assets

c.

15% of Investment assets

d.

20% of Investment assets

Discuss
Answer: (b).10% of Investment assets Explanation:Investments in securitised assets (Mortgage Backed Securities, Asset Backed Securities, Security Receipts) for life insurance companies should not exceed 10% of the Investment assets.
Q145.
Under what conditions will an MBS/ABS with underlying housing or infrastructure assets be reclassified as Other Investments?

a.

If downgraded below AAA or equivalent

b.

If upgraded to AAA or equivalent

c.

If downgraded below AA or equivalent

d.

If it exceeds 10% of Investment assets

Discuss
Answer: (a).If downgraded below AAA or equivalent Explanation:An MBS/ABS with underlying housing or infrastructure assets will be reclassified as Other Investments if it is downgraded below AAA or equivalent.
Q146.
What is the maximum limit for investment in immovable property under Section 27A(1)(n) of the Act for general insurers?

a.

2% of Investment assets

b.

5% of Investment assets

c.

7% of Investment assets

d.

10% of Investment assets

Discuss
Answer: (b).5% of Investment assets Explanation:Investment in immovable property covered under Section 27A(1)(n) of the Act should not exceed, at the time of investment, 5% of the Investment Assets in the case of general insurers.
Q147.
What is the exposure limit for financial and insurance activities for all insurers?

a.

15% of investment assets

b.

20% of investment assets

c.

25% of investment assets

d.

30% of investment assets

Discuss
Answer: (c).25% of investment assets Explanation:The exposure limit for financial and insurance activities stands at 25% of investment assets for all insurers.
Q148.
How should investments in Fixed Deposits and Certificate Deposits of a scheduled bank be made?

a.

In compliance with Section 27A (9) and Section 27B (10) of the Insurance Act

b.

Without any regulatory restrictions

c.

Subject to exposure limits for financial and insurance activities

d.

Through private placement

Discuss
Answer: (a).In compliance with Section 27A (9) and Section 27B (10) of the Insurance Act Explanation:Investments in Fixed Deposits and Certificate Deposits of a scheduled bank should be made in terms of the provisions of Section 27A (9) and Section 27B (10) of the Insurance Act. Such investments would not be deemed as exposure of financial and insurance activities.
Q149.
What type of information is required to be submitted by insurers to the Authority according to Regulation 10?

a.

Investment portfolio details

b.

Internal and concurrent audit reports

c.

Policyholder benefits status

d.

Market analysis reports

Discuss
Answer: (b).Internal and concurrent audit reports Explanation:According to Regulation 10, insurers are required to submit the Internal/Concurrent Audit Report of the previous quarter with comments of the Audit Committee of the Board on various serious and serious points, along with the status of implementation of Audit Committee recommendations.
Q150.
When should returns for the quarter ending March be submitted, and when should they be resubmitted with audited figures?

a.

Within 15 days of the end of the quarter

b.

Within 30 days of the end of the quarter

c.

Within the period stipulated based on provisional figures and later resubmitted with audited figures within 15 days of adoption of accounts by the Board of Directors

d.

Within 45 days of the end of the quarter

Discuss
Answer: (c).Within the period stipulated based on provisional figures and later resubmitted with audited figures within 15 days of adoption of accounts by the Board of Directors Explanation:Returns for the quarter ending March shall be filed within the period stipulated based on provisional figures and later resubmitted with audited figures within 15 days of adoption of accounts by the Board of Directors.
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