Admitted assets is a class of assets that are permitted by local state laws to be included in an insurance company’s annual financial statements.
Regulations might include a required list of admitted assets. These might also include guidelines on how assets should be valued and how ceilings are determined.
The purpose of these regulations is to enable regulators to measure the level of solvency of an insurance company operating under their jurisdiction. This in turn, is to ensure that these financial institutions are not in danger of collapsing as the products they sell affects the lives, and sometimes livelihood of people.
The list of admitted assets might include:
- Funds
- Security
- Mortgages
- Real estate
- Stocks and bonds
- Equipment
- etc
Long term mortgages purchased from secondary mortgage markets have historically made up a significant portion of admitted assets as they were thought to be safe investments.
This was a big reason why insurance companies came under the spotlight during the financial crisis of 2008.
The trend is moving towards holding more short term financial instruments