SOLVENCY ANALYSIS

Solvency of insurance trust account is defined as ability to remit net premiums to insurance carriers when they are due and transfer commission income to the operating account when it is earned.

Two types of solvency are analyzed: “cash solvency” and “account current solvency”. Both are based on information reported on the trust account Balance Sheet.

The cash solvency is analyzed using cash and credit premium assets, and net premiums and commissions payable. This analysis calculates the cash funds surplus or deficit.

The account current solvency is analyzed adding to the cash and credit premium assets the premium and return premiums receivable. On the other hand, net premiums and commissions on premiums receivable are added to the net premiums and commissions payable. This analysis also calculates premium funds surplus or deficit.

The Solvency Analysis Report may be generated independent of the trust account Balance Sheet or Premium Float Statement.

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