CS Professional · IFSCA - Regulations, Listing and Compliances · Insurance and Reinsurance
An IIO's balance sheet shows total assets of Rs 40 crore, including Rs 10 crore of assets that are not admissible for solvency purposes (such as certain intangible or unrecognised-value items). Its liabilities are Rs 25 crore. What is its available solvency margin?
Available solvency margin is computed on admissible assets only. Removing the 10 crore of inadmissible assets from 40 crore leaves 30 crore, and deducting 25 crore of liabilities gives 5 crore. Using total assets would overstate the margin at 15 crore.
- ARs 15 crore
- BRs 5 croreCorrect
- CRs 10 crore
- DRs 35 crore
Explanation
Only admissible assets count: 40 - 10 = 30. Available margin = 30 - 25 = 5. Rs 15 crore wrongly uses total assets less liabilities without excluding inadmissible assets.
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