What are ‘Balance Sheet Reserves’
Balance sheet reserves refer to the amount expressed as a liability on the insurance company’s balance sheet for benefits owed to policy owners. Balance sheet reserves represent the amount of money insurance companies set aside for future insurance claims or claims that have been filed but not yet reported to the insurance company or settled. The amount of balance sheet reserves to be maintained is regulated by law.
Also known as “claim reserves.”
Explaining ‘Balance Sheet Reserves’
Balance sheet reserves are required of insurance companies by law to guarantee that an insurance company is able to pay any claims, losses or benefits promised to customers and claimants.
Further Reading
- The Federal Reserve System and Eurosystem's Balance Sheet Policies During the Financial Crisis: A Comparative Analysis – mpra.ub.uni-muenchen.de [PDF]
- The Federal Reserve's balance sheet as a financial-stability tool – books.google.com [PDF]
- Financial intermediaries and monetary economics – www.sciencedirect.com [PDF]
- Crisis and responses: the Federal Reserve in the early stages of the financial crisis – www.aeaweb.org [PDF]
- The Federal Reserve's balance sheet and earnings: a primer and projections – www.ijcb.org [PDF]
- Crisis and responses: the Federal Reserve and the financial crisis of 2007-2008 – www.nber.org [PDF]
- Confidence interval projections of the Federal Reserve balance sheet and income – ideas.repec.org [PDF]
- Asset‐based reserve requirements: reasserting domestic monetary control in an era of financial innovation and instability – www.tandfonline.com [PDF]
