Furniture, fixtures and equipment, leasehold improvements, non-admitted assets, prepaid expenses are all adjustments required for:

Question

Options

• Anoninsurance subsidiaries
• Binsurance pre-requisites
• Creinsurance statutory
• DNone of the above

• A
  72% (36)
• B
  8% (4)
• C
  16% (8)
• D
  4% (2)

Explanation

Option A is correct because under Statutory Accounting Principles (SAP), items like furniture, fixtures and equipment, leasehold improvements, non-admitted assets, and prepaid expenses are common balance sheet adjustments required when an insurance holding company accounts for its noninsurance subsidiaries - these items are typically non-admitted (excluded from surplus) on the insurance parent's statutory books but appear on the subsidiary's financials, requiring specific eliminations or adjustments. Option B ("insurance pre-requisites") is not a recognized statutory accounting term and has no defined set of associated adjustments. Option C ("reinsurance statutory") involves different adjustments entirely, such as ceded/assumed premiums, loss reserves, and unearned premium adjustments between ceding and assuming companies. Option D falls away because A is demonstrably correct.

Memory tip: Think "FLIP-N" - Furniture, Leasehold improvements, Inventory/prepaid, Plant (equipment), Non-admitted assets. These are all assets that can't be admitted on a statutory insurance balance sheet, making them the hallmark adjustments when carving out Non-insurance subsidiaries.

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