Admitted Assets
What Does Admitted Assets Mean?
Admitted assets are the financial items that an insurance company includes on its balance sheet when submitted to state regulators. These assets should be easily convertible to cash if they are not already represented as exact monetary figures.
Given the significant investments policyholders make in their insurance coverage and their reliance on it, regulators impose stringent requirements regarding the financial solvency of insurance companies compared to other types of businesses.
Insuranceopedia Explains Admitted Assets
When an insurance company submits its balance sheet to regulators, it must demonstrate financial solvency, meaning it has sufficient current funds and receivable cash in the future to cover the risks it has insured.
Insurance companies do not follow the generally accepted accounting principles (GAAP) used by most businesses. Instead, they adhere to statutory accounting principles, which impose stricter requirements regarding the financial liquidity of these companies.
