Admitted Assets

Home > Glossary > Admitted Assets

Generally in business, admitted assets are the economic resources available to that business with either tangible or intangible substance. In practice this applies to the anything that works towards production value and is owned. Cash is also an asset, and asset values are symbolized by cash values.admitted assets

Examples of tangible assets, are things like buildings or real estate, currency holdings, equipment, precious metal or currency holdings. Whereas intangible assets are things like franchise holders and holdings, patents, trademarks, brands and brand names, goodwill, etc.

This is not the case for insurance companies; insurance companies’ admitted assets are those assets which may be exhausted to cover its debts. These assets must be carefully accounted for and presented in financial statements according to individual state laws.

The admitted assets of an insurance company are its ability to fund and pay for claims during the course of any year and as such they must be liquid and capable of being valued. This is very important as in the event of a rush of claims, they determine the insurance company’s ability to pay out on those claims.

Assets that represent no income for the insurance company fall into the category of “all other assets” and do not make up part of the admitted assets. So furniture, buildings and the liabilities through unpaid or deferred premiums do not count. Nor do “invested assets” which are the sums of money an insurance company has tied up in investment vehicles (such as stocks or bonds) which produce a premium for the company.

In some states unpaid and deferred premiums are considered to be non-admissible assets for accounting purposes and these may not feature in the “all other assets” category at all.

Admitted Assets for US Insurance Companies

The vast majority of reported admitted assets for US insurers are likely to be things like accounts receivable, stocks and mortgages etc. These are items which can be quickly converted into cash in the circumstances of a rush of claims.

If an insurer’s liabilities exceed their admitted assets they are considered to be insolvent, and each state has differing regulations as to how claims will be dealt with in the event that the insurer becomes bankrupt.

Admitted assets are not normally equal to the maximum potential claim on any given insurer (and any sub-insurers) that could be levied by all potential claimants in one period, but they should be high enough to cover most reasonable eventualities.

Other Admitted Assets Definitions

Be the first to write a comment.

Your feedback