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
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Arbitrator who settles disputes over the amount of loss when an insurer and an insured do not agree. ...
Will written totally in the handwriting of that individual whose name appears on the will. ...
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Payment of an employee's employee benefit insurance plan benefits to the employee's individual retirement account ( IRA) or to another plan maintained by the employer. ...
Decision in the absence of a plaintiff or defendant at the specified court time. ...
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