Certain assets that normally are recognized under GAAP are excluded from the statutory balance sheet and are referred to as:

Question

Options

• Anon-reliance assets
• Bunrecognized assets
• Cnon-accountable assets
• Dnon-admitted assets

• A
  6% (3)
• B
  2% (1)
• C
  12% (6)
• D
  80% (39)

Explanation

Non-admitted assets (D) is the correct term used in statutory accounting (SAP) - the framework insurance regulators use - for assets that GAAP recognizes but that cannot be counted on the statutory balance sheet because they lack sufficient liquidity or reliability to pay policyholder claims. Examples include furniture, equipment, prepaid expenses, and certain receivables past due more than 90 days. Options A, B, and C ("non-reliance," "unrecognized," and "non-accountable") are simply invented terms with no standing in accounting or insurance regulation - they exist only as distractors.

Memory tip: Think "admitted" as in admitted to the balance sheet - if regulators won't "admit" the asset (because it can't quickly convert to cash to pay claims), it's non-admitted. The word mirrors how states license insurers as "admitted carriers," so the terminology is consistent throughout insurance regulation.

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