Trump's Bond Insurer Doesn't Seem To Have The $175M It's Guaranteeing

[moniss]

51. There is a difference under insurance/surety

regulations between "total assets" and "surplus". You can list any number you want for assets and it could all be encumbered. Surplus for a company is an amount of assets minus liabilities. Surplus from one company to another is prohibited. There is a foundational insurance pool of risks reason for that so that one division doesn't go writing risk way beyond it's own surplus and endangering/encumbering the surplus of another or the parent company. Each must stand on it's own underwriting and financials. Looked at another way, an insurance company that writes property and casualty insurance may also have a subsidiary that sells life insurance. But if they experience heavy losses in the property and casualty company, like from a large number of hurricanes, they cannot use the surplus etc. from their life insurance entity to make up the losses. Each broad category of insurance risk pools must be underwritten and survive on their own.

Stating the parent company assets is meaningless in this case and even in the case of the parent company because it is not stating it as surplus. Only as assets and we have no idea how much they have at risk against those assets. That being said the Knight web site claims an AM Best rating of A- rather than B++. So that becomes a question as well. It is also important to look at those ratings over time. But like I said if you aren't admitted to do business in the state none of all that financial aspect matters. In other words a Texas company issuing a life policy to somebody in Michigan when they are not authorized in Michigan doesn't mean the person in Michigan can claim anything when the insured dies. You can claim fraud and try to go that route and get the premiums back but you aren't getting the insurance amount.


https://pocketsense.com/definition-surplus-insurance-6077388.html