DEFINITION of 'Adjusted Liabilities'

The liabilities of an insurance company that differ from the company's statutory liabilities due to adjustments. It is calculated by taking the statutory liability and subtracting the interest maintenance reserve and asset valuation reserve. Statutory liabilities are the insurance company's liabilities as determined by the applicable accounting rules. Insurance companies are required by the National Association of Insurance Commissioners (NAIC) to maintain the aforementioned reserves as a cushion for potential equity and credit losses. This definition is specific to the insurance industry.

BREAKING DOWN 'Adjusted Liabilities'

Adjusted liabilities are used in the analysis of an insurance company and better reflect the economic reality of the liabilities as opposed to just the accounting value (statutory) of the liabilities. Many financial ratios are calculated based on adjusted liabilities to judge the liquidity and capital position of the insurance company. These ratios (such as adjusted liabilities to total adjusted capital) would be used by the rating agencies to assign a financial strength rating to the insurance company.

RELATED TERMS
  1. Adjusted Surplus

    The surplus (assets minus liabilities) of an insurance company ...
  2. Business Liability Insurance

    Insurance that protects a company and/or business owner in the ...
  3. Total Liabilities

    The aggregate of all debts an individual or company is liable ...
  4. Limited Liability

    A type of liability that does not exceed the amount invested ...
  5. Net Liabilities To Policyholders' ...

    The ratio of an insurer’s liabilities, including unpaid claims, ...
  6. Quick Liquidity Ratio

    The total amount of a company’s quick assets divided by the sum ...
Related Articles
  1. Investing

    Understanding Total Liabilities

    Total liabilities are the combined debts an individual or company owes.
  2. Insurance

    An Advisor's Guide to Prof. Liability Insurance

    A guide to what financial advisors need to know about professional liability insurance.
  3. Taxes

    What is a Tax Liability?

    Tax liability is the amount of money a person or entity owes to the government as the result of a taxable event.
  4. Investing

    Current Liabilities

    Current Liabilities are company debts due within one year or one operating cycle, whichever is greater. An operating cycle is the time it takes a company to purchase inventory and convert it ...
  5. Personal Finance

    How To Improve Net Worth By Decreasing Liabilities

    Here's an analysis of how to adjust liabilities and assets to improve net worth.
  6. Small Business

    Understanding Limited Liability

    Limited liability is a legal concept that protects equity owners from personal losses due to their ownership interest in the company.
  7. Investing

    Explaining Noncurrent Liabilities

    Noncurrent liabilities are financial obligations a company owes a year or more into the future.
  8. Insurance

    Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
  9. Insurance

    Insurance Companies Vs. Banks: Separate And Not Equal

    Insurance companies and banks are both financial intermediaries. However, they don't always face the same risks and are regulated by different authorities.
  10. Managing Wealth

    How You Can Protect Assets With Umbrella Insurance

    Here's why protecting your assets from litigation via umbrella liability insurance is a good idea.
RELATED FAQS
  1. What financial ratios are most useful for an investor to evaluate the liquidity of ...

    Learn which financial ratios are most useful for investors in financial analysis to evaluate the liquidity of an insurance ... Read Answer >>
  2. Do working capital funds expire?

    Find out how and why a company's working capital can change over time, though the fund does not actually expire, and how ... Read Answer >>
  3. On which financial statements does a company report its long-term debt?

    Discover which financial statements are used to report a company’s long-term debt, as well as how a company uses debt to ... Read Answer >>
  4. How are accounts payable listed on a company's balance sheet?

    Find out how accounts payable is listed on a company's balance sheet, why it is considered a current liability, and how it ... Read Answer >>
  5. What items on the balance sheet are most important in fundamental analysis?

    Read about which balance sheet items are considered most important for fundamental analysis, including cash, current liabilities ... Read Answer >>
  6. What does the operating cash flow ratio measure?

    Learn about the operating cash flow ratio, how the ratio is calculated and what it indicates about a company. 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