nonlife insurance- taxable?

two questions please help are tax-exempt bonds for nonlife taxable? (check CFI book, it seems has to be taxed) does nonlife has a policyholder reserve for investment income not taxed the same as life?

Tax exempt bonds are usually considers “Tax Exempt” but I think in the real world they can still be subject to I think state or city tax…or it might be Federal… Nonlife policyholders accounts are tax exempt. But if the nonlife has a trading account or somethign along those lines, it is taxable.

UMMM i thought nonlife is NOT tax exempt?

I think the PolicyHolder’s portfolios are tax-exempt…everything else is tax able…I thought I saw that in a problem…maybe it was Life insurance :frowning:

1.) They’re taxable entities. 2.) If they are tax exempt bonds, then they will not be taxed (under most circumstances) 3.) Can’t say for sure about Non-Life Investment Income for the Policyholder. As far as I know I don’t think there was any reference to this. I only saw it for the life insurance companies. Surplus income is almost certainly taxed

Ok looked it up in Stalla: “Taxes for life insurance companies are significant and complex. After-tax returns are the appropriate measure fo return. In simplest terms, investment income is allocated between claim reserves and surplus. That portion allocated to claim reserves is tax-exempt while the portion allocated to surplus is taxable.” — what I was thinking “Taxes for non-life insurance companies are a factor and are complex. Returns are measured after tax.” That’s all it says :frowning:

I have given my endorsement to Schweser whenever anyone has asked me about study materials. No longer. Schweser dropped the ball. Stupid things like this: Schweser says (SS5, p23): “gaps between investment income and maturing securities may arise during the underwriting cycle” WTF?? Seriously, how difficult is it to plagiarise CFAI? They totally lost the meaning. It might seem trivial, but I have much work to do and this kind of slip-up (of which there are dozens - perhaps even a hundred) slow me down b/c I have to dust off the CFAI book.

Means when cycle is near its completion your liabilities become due and your income stream from underwritings is reduced

Etienne ??? Schweser correctly describes the tax relationship in their notes, and it is worded very closely to Stalla. … I’m not sure if that’s what you’re talking about.

ok… someone just give me some help on this: Futures vs. Options if you have a strong outlook are futures better than options for hedging? and if you have no opinion are futures or options better? I feeel like schweser is contradictory…

For the second question: it depends on whether or not you want exposure to volatility. If you’re ok with volatility, then Options. If you have an aversion to volatility, then Futures.

if you have a strong outlook, you want to buy insurance (if you are long underlying) so options, if you have negative outlook you buy futures. CFAI states otherwise. I disagree and willing to prove my point

comp_sci_kid Wrote: ------------------------------------------------------- > Means when cycle is near its completion your > liabilities become due and your income stream from > underwritings is reduced Ymmt - I’m broadening the discussion to suit my own agenda (b&*ching about Schweser). Sorry. CSK - I agree with you, but the Schweser version of that makes no sense, right? “Gaps between investment income and maturing securities […]”??? For comparison, the corresponding sentence in CFAI is “casualty companies must be prepared to meet operating cash gaps with investment income or maturing securities”. The latter makes perfect sense.