Special Accounting Procedures for Stock Life Insurance Companies

A

A stock life insurance company that writes both participating and nonparticipating business is subject to special accounting procedures in certain jurisdictions. These procedures are put in place to address specific considerations related to the different types of policies offered by the company.

Option A suggests that the purpose of these special accounting procedures is to separate the accounting for participating and nonparticipating business. This separation allows for the appropriate determination of profits applicable to each type of business. Participating policies are those that entitle the policyholders to share in the company's profits through the payment of dividends. Nonparticipating policies, on the other hand, do not provide for such profit-sharing. By having separate accounting, the company can accurately determine the profits that are allocated to participating policyholders versus those that belong to the company itself.

Option B indicates that these accounting procedures are critical because the profits generated from participating business are regulated in terms of their distribution among participating policyholders and the company's stockholders. In the case of participating policies, the company is obligated to distribute a portion of its profits as dividends to policyholders. The specific regulations governing the distribution of these profits may vary depending on the jurisdiction. Therefore, the accounting procedures need to be designed in a way that ensures compliance with these regulations and facilitates the appropriate allocation of profits to policyholders and stockholders.

Option C states that some jurisdictions require the filing of statutory statement exhibits in multiple forms. These exhibits provide detailed financial information about the company's operations and are submitted to regulatory authorities. The three forms mentioned in the option may refer to separate filings for participating business, nonparticipating business, and a consolidated filing for the company as a whole. By requiring these separate filings, jurisdictions can gain a comprehensive understanding of the company's financial position and performance for each type of business it conducts.

Finally, option D suggests that any of the explanations provided in options A, B, or C could be the purpose of the special accounting procedures. This option implies that the purpose may vary depending on the specific jurisdiction and regulatory requirements governing stock life insurance companies.

To select the most appropriate answer, it would be helpful to refer to the relevant laws and regulations specific to the jurisdictions mentioned in the question.