The ability to pay claims in the event of occurrence of losses depends upon financial condition of the insurer. So an insurance company must remain financially sound to pay losses. Its assets, liabilities and policyholder surplus measure the financial position of the insurance company at any particular time.
Assets These are property both tangible and intangible in nature, owned by an entity, in this case an insurance company. These include money, stocks and bonds, buildings, office furniture equipment and accounts receivable from agents, brokers and reinsurers.
Admitted Assets are types of property such cash and stocks, that regulators allow insurers to show as assets on their financial statements. Such assets are easily convertible to cash at or near property’s market value.
Non Admitted Assets are types of property such as office furniture and equipment, that insurance regulators do not allow insurers to show assets on financial statements because these assets cannot readily be converted to cash at or near their market value.
How Is the Financial Performance of Insurers Measured
