What Does Total Admitted Assets Mean?
Total admitted assets are assets recognized and permitted by state laws to be included in the financial statements of the insurance company. They are important in determining the solvency of the insurance firm. Despite varying state laws, there is generally overall agreement as to which assets should be considered to determine solvency.
Insuranceopedia Explains Total Admitted Assets
For an insurance company, total admitted assets are a statutory requirement in financial documents. Different states have varying laws, and thus, these assets may vary from one state to another, but guidelines exist on how to determine admitted assets from the rest.
Typically, total admitted assets include liquid assets and receivables. The former refers to company assets that can be converted easily into cash within a reasonable time, such as a financial or calendar year. The same reasoning applies to receivables, which mostly include premiums due from policyholders. Therefore, they represent a significant component of an insurer's capital adequacy, which state regulators gauge to ensure insurers stay solvent and policyholders remain covered.