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
Length of time insurance policy is in force. ...
Classification of insured life and health risks based on the sex of the proposed insured. Gender has long been one of many factors in classifying, accepting, and rating risks. For example, ...
Coverage for all personal property, regardless of location of an insured and household residents, including children away at school. Written on an all risks basis, subject to excluded ...
Excess or deficit of gross premium above the pure cost of insurance and expenses. The result becomes the valuation of the asset share of the policyholder at the end of a given year. The ...
Method of terminating a split dollar life insurance policy in which the company transfers its interest in the life insurance policy to the insured employee. Through such a transfer, the ...
Same as term Original Age: insured's age at the date a term life insurance policy is issued. An original age or retroactive conversion option permits the insured to convert the term policy ...
difference between the face value of a permanent life insurance policy and its accrued cash value. The pure cost of protection is based on this difference. For example, if the face value ...
Plans that are similar to stock appreciation rights (SARS) in that an employee is granted a contractual right by the employer to a stipulated number of units in the business, which is ...
Named peril policy is how it’s called in the Real Estate Industry the insurance policies that specify the perils it covers. Under a named peril policy, if anything that isn’t ...
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