DTAs - an admitted asset?

Are DTAs (net of DTL) considered an admitted asset? The past exam problems asking you to calculate the statutory surplus seem to not show a DTA, so I'm not sure how it's treated. The Excel practice problem includes it as an admitted asset, but that seems counterintuitive as they can't be easily converted to cash.

Thanks for any help!

Comments

  • Spring Exam 2016 #15 includes net DTA as an admitted asset.

  • You're right that net DTA is not very liquid. So, under SAP, it is subjected to a strict admissibility test. What's declared as DTA is that which is admitted.

    [https://battleacts6us.ca/wiki6us/Odomirok.22-23-GAAP#DTA:~:text=DTAs (Deferred,DTAs%20fully%20recognized](https://www.battleacts6us.ca/wiki6us/Odomirok.22-23-GAAP#DTA:~:text=DTAs (Deferred,DTAs%20fully%20recognized "https://battleacts6us.ca/wiki6us/Odomirok.22-23-GAAP#DTA:~:text=DTAs (Deferred,DTAs%20fully%20recognized")

  • So if they're allowed on the balance sheet, they're automatically considered an Admitted Asset? I saw that 2016.s.15 included it, but then 2019.f.12 had it listed as a sample answer for things that are not admitted, so maybe it's considered admitted if it passes the admissibility test?

    Thanks!

  • Sorry to poke my nose in here, but been trying to look at the same thing.

    I think the differentiation of DTA in these two exam problems is the 'Net' status. In 2016.s.15 we have DTA > DTL and thus we treat the difference as admitted. In 2019.f.12 we aren't given any information about a DTA that could be admitted, so I think we have to assume that in this case it either failed the admissibility test or is not expected to be realized.

    Odom says "For any DTA, an insurer can only record the portion of the asset that is expected to be realized... [and] must perform an admissibility test to determine the amount of a DAT that can be considered as an admitted asset" (pg 32).

    So the way I'm reading that is anything recorded as a DTA in Assets can be considered "Admitted" once we net out the DTL.

  • I agree with @marquaty on the interpretation of his Odomirok excerpt.

Sign In or Register to comment.