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
Same as term CEDE: to transfer a risk from an insurance company to a reinsurance company. ...
Single contract coverage on a group basis issued to an employer. Group members receive certificates as evidence of membership summarizing benefits provided. ...
Actuarial evaluation of the assets of a pension plan according to the fair market value of the assets. ...
Amount of insurance remaining on a ceding company's books, net of the amount reinsured. ...
Same as term: Total Loss: condition of real or personal property when it is damaged or destroyed to such an extent that it cannot be rebuilt or repaired to equal its condition prior to the ...
Transfer of high severity risks through the insurance contract to protect against catastrophic occurrences. While insurance is generally not the most cost-effective means of recovery of ...
Excess coverage over the first layer of medical insurance to provide for catastrophic medical payments. The first layer may be either group or individual medical insurance, or an individual ...
Trust that qualifies assets under the marital deduction provision in the Federal Tax Code for favorable treatment of an estate. The surviving spouse has the full power to use the assets of ...
Total premiums received by a property and liability insurance company without any adjustments for the ceding of any portion of these premiums to the reinsurer. ...
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