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
Life insurance: Bonds most state regulations permit life insurance company investments in debentures, mortgage bonds, and blue chip corporate bonds. Stocks(a) preferred stock investment ...
Payment by the insurance company to the insured for the actual expenses incurred by the insured, such as medical expenses. ...
Life insurance that stays in effect for only a specified, limited period. If an insured dies within that period, the beneficiary receives the death payments. If the insured survives, the ...
Broad excess protection for liability over the level of primary coverage or self insurance. Umbrella policies are written for both business and personal liability. For example, a personal ...
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Ratio of the insurance company's investment in common stocks dividend to its adjusted surplus account. This ratio shows how vulnerable the company's surplus is to the stock market ...
1957 federal law setting a limit on the liability of operators of nuclear facilities. The law, an amendment to the Atomic Energy Act of 1954, authorized establishment of private insurance ...
Professional designation earned after the successful completion of four national examinations given by the insurance institute of America (IIA). Covers such areas of expertise as insurance ...
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