DEFINITION of 'Active Retention'

The practice of protecting against a loss via the designation of specific funds to pay for the expected amount of the loss. This contrasts to passive retention, in which no money is set aside to cover expected losses.

BREAKING DOWN 'Active Retention'

The process of active retention makes it possible to protect against losses of relatively small amounts that occur regularly. It is regarded as a form of self-insurance. One of the benefits of active retention is the avoidance of the administrative costs associated with seeking insurance from another party.

RELATED TERMS
  1. Risk Retention Group (RRG)

    A state-chartered insurance company that insures commercial businesses ...
  2. Retention Ratio

    The proportion of earnings kept back in the business as retained ...
  3. Retention Bonus

    A payment or reward outside of an employee's regular salary that ...
  4. Complete Retention

    A risk management technique in which a company facing risks decides ...
  5. Second Event Retention

    A technique used to establish retention in an excess of loss ...
  6. Grandfathered Bond

    A classification for bonds in the European Union that excludes ...
Related Articles
  1. Investing

    Dividend Ratios: Payout And Retention

    The dividend payout ratio and retention ratio measure how much profit a company gives back to shareholders as dividends. When a business earns money, it must decide whether to use all of its ...
  2. Investing

    Corporate Dividend Payouts And the Retention Ratio

    An investor can use dividend payout and retention ratios to gauge an investment’s possible return, and compare it to other stocks.
  3. Investing

    Passively Managed Vs. Actively Managed Mutual Funds: Which is Better?

    Learn about the differences between actively and passively managed mutual funds, and for which types of investors each management style is best suited.
  4. Retirement

    Active vs. Passive Investing During Retirement

    How these two investing approaches work – and how to decide which best suits your precious nest egg.
  5. Managing Wealth

    Capital Losses and Tax

    When an investment sells for less than its purchase price, the difference is a capital loss.
  6. Investing

    A Statistical Look at Passive Vs. Active Management

    Find out what the data has to say about the passive management Vs. active management debate, and why there isn't necessarily a clear winner.
  7. Investing

    Lessons On Corporate Dividend Payout And Retention Ratio

    Why are dividend payout and retention ratios important to consider when investing in company stock? What companies have high ratios?What constitutes a high dividend payout and retention ratio? ...
  8. Investing

    Money Managers Unite Against Passively Managed Funds

    Money managers put their heads together at summit in early November to strategize on how to overcome the loss of clients to passively managed funds.
RELATED FAQS
  1. What are some ways employers can reduce employee turn over?

    Learn a few strategies in hiring, compensation and management that employers can use for increasing employee retention and ... Read Answer >>
  2. How do fringe benefits help increase employee retention?

    Offering fringe benefits can be a valuable retention tool for employers wanting to maintain a high-quality, highly productive ... Read Answer >>
  3. What impact does brand equity have on profit margins?

    Learn how both positive and negative brand equity affects profit margins by influencing profit per customer, sales volume ... Read Answer >>
Hot Definitions
  1. Life Insurance

    A protection against the loss of income that would result if the insured passed away. The named beneficiary receives the ...
  2. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  3. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  4. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Down Round

    A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the ...
Trading Center