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 Annual Statement: report that an insurance company must file annually with the State Insurance Commissioner in each state in which it does business. The statement shows the ...
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Individual receiving medical treatment who is not required to be hospitalized overnight. ...
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Long-term investment plan strategy under which all of the investor's investable assets are divided into predetermined proportions among several different types of securities. In theory, ...
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