Adjusted Liabilities

AAA

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.

INVESTOPEDIA EXPLAINS '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 Underwriting Profit

    The profit that an insurance company generates after paying out ...
  2. Calendar Year Accounting Incurred ...

    Calendar year accounting incurred losses is a term used in the ...
  3. National Association of Insurance ...

    A nationwide organization whose main responsibility is to protect ...
  4. Universal Life Insurance

    A type of flexible permanent life insurance offering the low-cost ...
  5. Level-Premium Insurance

    A type of term life insurance for which the premiums remain the ...
  6. Insurance

    A contract (policy) in which an individual or entity receives ...
Related Articles
  1. Home & Auto

    A Look At Single-Premium Life Insurance

    Want to provide for your dependents and finance your own long-term care? Learn more here.
  2. Home & Auto

    How An Insurance Company Determines Your Premiums

    Find out how insurers use credit history to build an insurance score and how it could affect your bottom line.
  3. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  4. Options & Futures

    Getting the Whole Story on Variable Annuities

    Variable annuities are another way to save money tax-deferred - but don't jump in blindly!
  5. Retirement

    Variable Vs. Variable Universal Life Insurance

    Do you know why you might need one policy versus the other? Read on to find out.
  6. Fundamental Analysis

    What is the difference between operating cash flow and net income?

    Learn how net income is an income statement for a certain period of time, while cash flow shows inflows and outflows based on conversion of sales into cash.
  7. Options & Futures

    Is short selling a form of insurance?

    Explore short selling and put options. Learn how put options may be used as insurance to protect positions, and costs associated with using this method.
  8. Fundamental Analysis

    How do I calculate dividend payout ratio from a balance sheet?

    Understand what the dividend payout ratio indicates and learn how it can be calculated using the figures from a company's balance sheet statement.
  9. Credit & Loans

    When is it necessary to get a letter of credit?

    Capitalize on assets and negate risks by using a letter of credit. Letters of credit are often requested for buying, selling or trading.
  10. Fundamental Analysis

    Can entities other than banks issue letters of credit?

    Obtaining a letter of credit from a non-bank is legally acceptable according to the ICC, but companies tend to prefer to receive them from banks.

You May Also Like

Hot Definitions
  1. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  2. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  3. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  4. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  6. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
Trading Center