Effect of non-admitted assets on Surplus

[cgott42]

Felblum's paper on Surplus:
Can someone explain TIA's explanation of how an INCREASE in the non-admitted assets from one year end to the next would cause a DECREASE to surplus.

Their explanation centers around the fact that the balance sheet must "balance"-
Can someone explain what they are saying as a change in an asset (e.g. non-admitted assets) wouldn't affect other assets (admitted) or liabilities.
The balance sheet "balances" b/c there is a balancing item - namely surplus.
Can't the non-admitted asset increase due to NEW premium which came in and are over 90 days overdue- i.e. the past amount of non-admitted assets has stayed the same, just additional (new) premium is overdue.

[TOTEM]

Felblum's paper on Surplus:
Can someone explain TIA's explanation of how an INCREASE in the non-admitted assets from one year end to the next would cause a DECREASE to surplus.

This is a direct charge to surplus. The asset account decreases and the liabilities stay the same, therfore the surplus must decrease( Assets=Liabilities + Surplus)

Their explanation centers around the fact that the balance sheet must "balance"-
Can someone explain what they are saying as a change in an asset (e.g. non-admitted assets) wouldn't affect other assets (admitted) or liabilities.

The non-admitted asset change will only affect that respective assets' T-Account. In effect, the value of that particular asset on the statutory balance sheet has decreased, therefore there has to be a corresponding decrease to surplus because none of the liability entries have changed. The debits and credits have to equal, so the entries would be credit the asset account (decrease) and debit surplus (increase).

The balance sheet "balances" b/c there is a balancing item - namely surplus.
Can't the non-admitted asset increase due to NEW premium which came in and are over 90 days overdue- i.e. the past amount of non-admitted assets has stayed the same, just additional (new) premium is overdue
Therefore there is an increase in the non-admitted asset, so the surplus will decrease. However once the premium is paid the non-admitted asset goes to zero, and surplus is restored.

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Hopefully this helps.