Under the nonadmitted balances rules for high deductible recoverables, in the absence of collateral, deductible recoveries become nonadmitted when they are overdue by more than 90 days.

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Multiple Choice

Under the nonadmitted balances rules for high deductible recoverables, in the absence of collateral, deductible recoveries become nonadmitted when they are overdue by more than 90 days.

In statutory accounting, deductible recoverables with no collateral are treated as admitted assets only if they are reliably collectible. If such a recoverable is overdue beyond a certain patience window, its certainty of collection drops, so it must be reclassified as nonadmitted. The cutoff in this rule is an overdue period of more than 90 days, after which the amount is no longer admitted on the balance sheet. This protects the financial statements from overstating assets when collection is uncertain. The other timeframes (overdue by more than 120 days or scheduled to be collected within 60 days) don’t match this standard threshold, and saying it’s never nonadmitted contradicts the guideline.

In statutory accounting, deductible recoverables with no collateral are treated as admitted assets only if they are reliably collectible. If such a recoverable is overdue beyond a certain patience window, its certainty of collection drops, so it must be reclassified as nonadmitted. The cutoff in this rule is an overdue period of more than 90 days, after which the amount is no longer admitted on the balance sheet. This protects the financial statements from overstating assets when collection is uncertain. The other timeframes (overdue by more than 120 days or scheduled to be collected within 60 days) don’t match this standard threshold, and saying it’s never nonadmitted contradicts the guideline.

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