Statutory Earnings
Revenue based on conservative reserve requirements of various states. Statutory earnings do not meet generally accepted accounting principles (GAAP). A role of state regulation is to make certain that insurers have enough money set aside in statutory reserves to pay all future claims and that the company will remain solvent. For this reason, regulators take a conservative approach to setting reserve requirements. But because an increase in reserves translates into lower earnings for a stock insurer, investors, and securities analysts argue that they are not helpful in gauging the health of a company for investment purposes. Therefore, insurers calculate statutory earnings for regulators and another set of earnings, based on natural reserves, for investors.
Popular Insurance Terms
Association of general agents and managers affiliated with the NATIONAL ASSOCIATION FOR LIFE UNDERWRITING (NALU). Their objective is to seek solutions to common managerial problems. GAMC ...
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Difference between the actual mortality experience and the expected mortality experience. In statistical terms, this is known as the deviation of the actual (X) from the expected (X). The ...
Present value of future benefits. This type of reserve would be applicable for single premium life insurance, paid-up insurance, single premium annuity, and a paid-up annuity. ...
Specified amount received by an insured at the end of an endowment period (usually the face amount of the endowment policy), or by the owner of an ordinary life policy (usually the ...
Endorsement attached to an insurance policy that eliminates coverage for certain specified perils. ...
In a pension plan that an employer is required to make against future contributions (other than a cash basis as required by the IRS). Such credits may arise when an employee leaves an ...
Dividends paid historically, currently, and projected. ...
Tax, under federal and state laws, on transfer of property made without payment or other value in exchange. ...
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