Statutory Accounting

Definition of "Statutory accounting"

April Barra real estate agent
April Barra, Real Estate Agent Florida Executive Realty

Rules that insurance companies must follow in filing an annual financial statement known as the convention blank, with state insurance departments. The reported financial condition of an insurance company can differ markedly depending on whether statutory accounting rules or generally accepted accounting principles (gaap) are used in preparing financial statements. In general, statutory accounting is more conservative than GAAP because it tends to overstate expenses and liabilities while understating income and assets.

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