State insurance departments, assisted and guided by the National Association of Insurance Commissioners (NAIC), use a number of tools to monitor the financial condition of insurers with a view to preventing insolvencies. The following statements are about these tools. Select the answer choice containing the correct statement. Every insurer undergoes the statistical phase of IRIS, during which the NAIC examiners compare the financial ratios reported in an insurer's Annual Statement with a set of 12 standard financial ratios as a way to test a company's solvency, profitability, and financial stability. The results of the analytical phase of IRIS pertaining to specific companies are made available to the public as soon as those results are finalized. A financial condition examination is limited to a verification of an insurer's accounting records and does not investigate the insurer's financial and business profiles to identify any hazards to the insurer's solvency. State insurance departments do not conduct full-scope examinations of an insurer's financial position on a regularly scheduled basis, relying instead on limited-scope examinations to monitor solvency.

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