SOFA-CFE · Question #2
What are recognized and accepted by state insurance departments in evaluating the solvency of an insurer for statutory accounting purposes?
The correct answer is C. Admitted assets. Admitted assets are the only assets recognized by state insurance departments when evaluating insurer solvency under statutory accounting principles (SAP). These are assets that regulators deem liquid and accessible enough to pay policyholder claims - such as stocks, bonds, and…
Question
What are recognized and accepted by state insurance departments in evaluating the solvency of an insurer for statutory accounting purposes?
Options
- AAssets
- BDetermined assets
- CAdmitted assets
- DAltered assets
How the community answered
(40 responses)- A8% (3)
- B3% (1)
- C73% (29)
- D18% (7)
Explanation
Admitted assets are the only assets recognized by state insurance departments when evaluating insurer solvency under statutory accounting principles (SAP). These are assets that regulators deem liquid and accessible enough to pay policyholder claims - such as stocks, bonds, and cash - and are subject to strict valuation rules under the NAIC's Statements of Statutory Accounting Principles.
Why the distractors are wrong:
- A (Assets) is too broad - not all assets an insurer holds qualify; some are excluded by regulators.
- B (Determined assets) is not a recognized term in insurance accounting or regulatory parlance.
- D (Altered assets) is likewise fabricated terminology with no standing in statutory accounting.
Memory tip: Think "admitted = admitted to the courtroom." Only assets that pass regulatory scrutiny are admitted as evidence of solvency - everything else is excluded, just like inadmissible evidence. The word "admitted" in insurance mirrors its legal sense: officially recognized and accepted.
Community Discussion
No community discussion yet for this question.