100+ Free IFoA SA2 Practice Questions

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2026 Statistics

Key Facts: IFoA SA2 Exam

3h20m

Exam Duration

IFoA SA2 syllabus

~300

Credit Value

IFoA Fellowship structure

Written

Exam Format

IFoA SA2 syllabus

99.5%

SCR Confidence

Solvency UK

Risk-Margin CoC

Solvency UK reforms

100%

FSCS Life Cover

FSCS rules

SA2 is an advanced IFoA Fellowship subject assessed by a single 3 hour 20 minute online written paper of long-answer, case-based questions, not multiple choice. Building on SP2, it covers UK life products, PRA and FCA regulation including the Consumer Duty, Solvency UK technical provisions, SCR, the matching adjustment and risk margin, IFRS 17, with-profits management and the PPFM, unit-linked business, embedded value, reinsurance, taxation, and capital and asset-liability management. This free bank provides 100 advanced multiple-choice questions as knowledge prep aligned to the 2026 syllabus and the latest Solvency UK reforms.

Sample IFoA SA2 Practice Questions

Try these sample questions to test your IFoA SA2 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under the UK regulatory architecture, which body is responsible for the prudential supervision of insurers, including setting capital requirements such as the Solvency Capital Requirement?

A.The Prudential Regulation Authority (PRA)

B.The Financial Conduct Authority (FCA)

C.The Financial Reporting Council (FRC)

D.The Pensions Regulator (TPR)

Explanation: The PRA, part of the Bank of England, is the prudential regulator for insurers and banks and sets and supervises capital and solvency requirements. The FCA is the conduct regulator. Insurers are therefore 'dual-regulated' by both the PRA and FCA.

2An insurer must treat customers fairly and ensure products deliver fair value to identified target markets. Which FCA regime most directly imposes these outcomes-based obligations on UK life insurers?

A.The Senior Managers and Certification Regime

B.The Consumer Duty

C.The Matching Adjustment

D.The ORSA

Explanation: The FCA's Consumer Duty (in force from July 2023) sets a higher standard of consumer protection through cross-cutting rules and four outcomes covering products and services, price and value, consumer understanding and consumer support. It is the principal conduct framework driving fair-value assessments.

3Under Solvency II / Solvency UK, technical provisions for business that cannot be reliably replicated by a hedging portfolio are calculated as the sum of which two components?

A.Statutory reserve plus a resilience reserve

B.Gross premium reserve plus a Zillmer adjustment

C.Best estimate liability plus a risk margin

D.Market value of assets plus a prudential margin

Explanation: For non-hedgeable risks, technical provisions equal the best estimate liability (probability-weighted present value of future cash flows on a market-consistent basis) plus a risk margin computed using a cost-of-capital approach. This contrasts with replicable cash flows valued directly at market prices.

4Following the Solvency UK reforms, the cost-of-capital rate used in the risk margin calculation for long-term insurance business was changed from 6% to which value?

A.3%

B.5%

C.8%

D.4%

Explanation: As part of the post-Brexit Solvency UK reforms, the risk margin cost-of-capital rate was reduced from 6% to 4% and a tapering (lambda) factor was introduced, cutting the risk margin for long-term life business by roughly 65%. This released capital to support, for example, annuity and bulk-purchase-annuity writing.

5The Solvency II Standard Formula Solvency Capital Requirement is calibrated to which confidence level over a one-year horizon?

A.99.5% VaR

B.95.0% VaR

C.99.0% VaR

D.99.9% VaR

Explanation: The SCR corresponds to the Value-at-Risk of basic own funds at a 99.5% confidence level over one year, i.e. the capital sufficient to withstand a 1-in-200-year adverse event. Internal models must demonstrate calibration to this same standard.

6Which feature is the defining eligibility condition for an insurer to apply the Matching Adjustment to a portfolio of annuity liabilities?

A.The liabilities must be unit-linked with no guarantees

B.The assets and liabilities must have closely matched, fixed and predictable cash flows held to maturity

C.The portfolio must be reinsured on a quota-share basis

D.The liabilities must include significant lapse optionality

Explanation: The Matching Adjustment lets a firm add an illiquidity premium to the discount rate where it holds a ring-fenced portfolio of assets with cash flows that closely match the fixed, predictable liability cash flows and is held to maturity. This is why it suits non-profit annuities, which lack surrender options.

7Within the Matching Adjustment calculation, the portion of the asset spread attributed to the cost of defaults and downgrades — and therefore deducted before crediting the MA — is known as the:

A.Volatility adjustment

B.Ultimate forward rate

C.Fundamental spread

D.Symmetric adjustment

Explanation: The MA equals the asset spread over the risk-free rate less the fundamental spread, which represents the cost of credit risk (probability of default and cost of downgrade). Only the residual illiquidity premium is credited, so the firm is not rewarded for bearing retained credit risk.

8What does the Transitional Measure on Technical Provisions (TMTP) achieve for a UK life insurer?

A.It permanently exempts annuities from the SCR

B.It replaces the risk margin with a market-value margin

C.It removes the need to hold a Minimum Capital Requirement

D.It phases in the increase in technical provisions on transition to Solvency II over a 16-year run-off

Explanation: TMTP smooths the impact of moving in-force business onto the Solvency II valuation basis by allowing the increase in technical provisions to be amortised on a straight-line basis over the 16 years from 1 January 2016 to 2032. It eases the capital strain of transition rather than removing any requirement.

9An insurer's Solvency II own funds are 1,200m and its SCR is 800m. What is its SCR coverage (solvency) ratio?

A.150%

B.66.7%

C.100%

D.200%

Explanation: The SCR coverage ratio is eligible own funds divided by the SCR: 1,200 / 800 = 1.5, or 150%. A ratio above 100% means the firm holds capital in excess of its 1-in-200 requirement; 150% indicates a comfortable surplus buffer.

10Under the Solvency II tiering of own funds, which item would typically qualify as the highest-quality Tier 1 capital?

A.Subordinated debt with a 10-year maturity

B.Ordinary paid-up share capital and the associated reconciliation reserve

C.A contingent loan repayable on demand

D.An ancillary own-fund letter of credit

Explanation: Tier 1 unrestricted own funds comprise the highest-quality, fully loss-absorbing and permanently available capital — chiefly ordinary paid-up share capital, share premium and the reconciliation reserve. Lower tiers contain items with maturity, redemption features or limited loss absorbency.

About the IFoA SA2 Exam

IFoA SA2 Life Insurance Specialist Advanced develops the expertise needed by a senior manager of a UK life insurance company, covering the regulatory, Solvency UK, IFRS 17, with-profits, capital and asset-liability management environment.

Assessment

One timed online written examination of long-answer and case-based questions

Time Limit

3 hours 20 minutes

Passing Score

Pass mark set by the IFoA Board of Examiners each session; results are reported as Pass or Fail with no fixed published percentage

Exam Fee

See the IFoA exam and other fees schedule; entry fees are published per examination session (Institute and Faculty of Actuaries (IFoA))

IFoA SA2 Exam Content Outline

~20%

Life Insurance Products and Business Environment

Understand UK life, health and care products, distribution channels, the commercial and economic environment, and how product design and competition shape a life insurer's strategy.

~25%

Regulatory, Legislative and Taxation Environment

Apply PRA prudential and FCA conduct regulation, the Consumer Duty, SM&CR, Solvency UK requirements, FSCS policyholder protection, and UK life insurance taxation including the I minus E basis for BLAGAB.

~25%

Reporting and Management of Capital and Profit

Calculate Solvency II/UK technical provisions, the SCR and MCR, apply IFRS 17 measurement models, and interpret embedded value, supervisory surplus and profit-reporting approaches.

~30%

Capital Management, ALM and Risk Techniques

Use capital assessment and management techniques, reinsurance and securitisation, asset-liability management and derivatives, with-profits management and the PPFM, and unit-linked reserving.

How to Pass the IFoA SA2 Exam

What You Need to Know

Passing score: Pass mark set by the IFoA Board of Examiners each session; results are reported as Pass or Fail with no fixed published percentage
Assessment: One timed online written examination of long-answer and case-based questions
Time limit: 3 hours 20 minutes
Exam fee: See the IFoA exam and other fees schedule; entry fees are published per examination session

Keys to Passing

Work through all 100 available questions
Review every answer and explanation
Track weak areas and revisit them
Use our AI tutor for tough concepts

IFoA SA2 Study Tips from Top Performers

1Practise full written past papers under the 3 hour 20 minute time limit; SA2 rewards structured, applied answers far more than memorised facts.

2Be precise on Solvency UK mechanics: distinguish best estimate liability, risk margin, SCR, MCR, matching adjustment, volatility adjustment and TMTP, and know the current 4% risk-margin cost of capital.

3Compare IFRS 17 and Solvency II/UK side by side, including CSM, risk adjustment, the variable fee approach for with-profits and the differing discount-rate and contract-boundary treatments.

4Know with-profits governance cold: asset shares, smoothing, bonuses, the estate, the PPFM and the fair treatment of policyholders, including how management actions provide loss-absorbing capacity.

5Link capital management to strategy: explain how reinsurance, securitisation, ALM and the matching adjustment improve the SCR coverage ratio while keeping policyholder fairness and the Consumer Duty in view.

Frequently Asked Questions

How is the IFoA SA2 exam structured?

SA2 is assessed by one timed, online written examination of 3 hours 20 minutes. The questions are long-answer and case-based, testing application and judgement rather than multiple-choice recall, so candidates must write structured, reasoned answers.

How long is the IFoA SA2 exam?

The SA2 paper lasts 3 hours 20 minutes and is sat online. Because it is a written, application-based paper, strong time management and clear, well-justified answers are essential to pass.

What is the passing score for IFoA SA2?

The IFoA Board of Examiners sets the pass mark for each session and reports outcomes as Pass or Fail. There is no fixed published percentage, as standards are maintained across sittings through the examiners' marking and standardisation process.

Which topics matter most on SA2?

Capital and profit reporting, Solvency UK, IFRS 17 and capital/ALM management dominate the syllabus, alongside the UK regulatory and taxation environment. With-profits management and the PPFM, unit-linked business, embedded value and reinsurance are also core.

What changed for UK life insurers under Solvency UK?

Post-Brexit Solvency UK reforms cut the risk-margin cost of capital from 6% to 4% (reducing the long-term life risk margin by around 65%), liberalised matching adjustment eligibility, and simplified the TMTP transition that runs to 2032.

Does this practice bank match the real SA2 exam format?

The real SA2 exam is a written, case-based paper, not multiple choice. This free bank of 100 multiple-choice questions is advanced knowledge prep aligned to the 2026 syllabus, useful for testing recall and concepts before practising full written past papers.

100+ Free IFoA SA2 Practice Questions

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