IRIS 9

mm139300mm139300
in NAIC.IRIS

In 2019 (Spring) Question 10b, we have to subtract Deferred Agents Balances from the total liabilities. I don't understand why. I see the IRIS 9 formula calls for total liabilities less "liabilities equal to DAB"... but in 2019 (Spring) Q10, the DAB is an asset. The Company has $92.7M total liabilities and IRIS 9 is looking for liabilities compared to liquid assets available to cover those liabilities. Why would we reduce total liabilities because the company has DAB assets?

Comments

  • Staff - ACStaff - AC

    Here's one possible explanation from Graham:

    • If DAB were a liquid asset, you would add it to the denominator (thus reducing the IRIS 9 ratio)
    • But since it is NOT a liquid asset, you CANNOT add it to the denominator.
    • But IRIS 9 is still attempting to account for it in some way, so to do that, it is subtracted from the numerator (thus reducing the IRIS 9 ratio)

    But I wouldn't get bogged down with the reason for it, because IRIS questions are almost always about the ratio and its range.

Sign In or Register to comment.