An admitted asset refers to any valuable possession owned by a company or individual. This encompasses various items such as money, inventory, equipment, and property. Insurance companies must possess admitted assets to demonstrate their financial stability. Additionally, assets can also include intangible properties like patents or trademarks. While certain assets can be easily converted into cash, others may be more challenging to sell.
An asset is something owned that holds value. This can include the items listed on a balance sheet such as cash, inventory, equipment, real estate, accounts receivable, and goodwill. It can also refer to all the property owned by a person, particularly in the case of bankruptcy or death, that can be used to pay off debts or distributed. In the insurance industry, admitted assets are those that are legally allowed to be used in assessing the financial stability of an insurance company. For example, a company’s cash, inventory, and equipment are considered admitted assets. Similarly, in the case of bankruptcy, all of a person’s property, including real estate and accounts receivable, can be used to settle debts.
An admitted asset refers to an asset that an insurance company includes on its financial statements and is recognized by the state insurance department for regulatory purposes.
Common examples of admitted assets include cash, government bonds, stocks, real estate, and other investments that meet the regulatory criteria set by the state insurance department.
Having admitted assets is crucial for insurance companies as it demonstrates their financial stability and ability to meet policyholder obligations. It also ensures compliance with state insurance regulations.
Non-admitted assets are not recognized by the state insurance department for regulatory purposes. These assets may include certain types of investments or assets that do not meet the regulatory criteria.
No, insurance companies cannot use non-admitted assets to pay claims. Only admitted assets are considered eligible for meeting policyholder obligations.
Admitted assets are typically valued at their fair market value, which is the price that would be received to sell the asset in an orderly transaction between market participants at the measurement date.
Yes, there are certain restrictions on the types of admitted assets an insurance company can hold. These restrictions vary by state and are designed to ensure the safety and soundness of the insurance industry.
If an insurance company’s admitted assets fall below the required level, it may be considered financially unstable. In such cases, the state insurance department may take regulatory action, such as placing the company under supervision or taking over its operations.
Insurance companies are generally required to invest their admitted assets in low-risk and highly liquid investments to ensure the safety of policyholder funds. Risky ventures may not be allowed or may be subject to certain limitations.
Policyholders can verify an insurance company’s admitted assets by reviewing its financial statements, which are typically available on the state insurance department’s website. Additionally, they can contact the state insurance department directly for more information.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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