Retained Earnings


Definition of "Retained earnings"

Boyce Grooms
Boyce Grooms Century 21

Net profit of a business, less dividends. Reinvestment of retained earnings enables an insurance company to write more business from a stronger capital base. Contributions to retained earnings come from three sources: excess interest from investment earnings; loss savings (fewer and/or smaller losses than were loaded into premiums); and expense savings (less expense costs than were loaded into premiums).

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