Asset Valuation Reserve - AVR

DEFINITION of 'Asset Valuation Reserve - AVR'

Capital required to be set aside in order to cover a company against unexpected debt. The asset valuation reserve serves as a backup for equity and credit losses. A reserve will have capital gains or losses credited or debited against the reserve account.

BREAKING DOWN 'Asset Valuation Reserve - AVR'

Usually the asset reserve consists of two components, a default component and an equity component. The default component protects future credit related losses, and includes arrangements for corporate debt securities, preferred stock, mortgage backed securities, farm, commercial and residential mortgages. For example, the National Association of Insurance Commissioners (NAIC) has to keep a liability reserve to cover claims in real estate and mortgages. The equity component has provisions for common stocks and real estate.

RELATED TERMS
  1. Valuation Reserve

    The funds set aside by life insurers as required by state law ...
  2. Free Reserves

    A measurement of a bank's reserves that is equal to the difference ...
  3. Loss Reserve

    An estimate of an insurer’s liability from future claims. Loss ...
  4. Losses and Loss-Adjustment Expense

    The portion of an insurance company’s reserves set aside for ...
  5. Reserve Ratio

    The portion (expressed as a percent) of depositors' balances ...
  6. Primary Reserves

    The minimum amount of cash required to operate a bank. Primary ...
Related Articles
  1. Investing

    Explaining Capital Reserve

    Capital reserve is an account on a company’s or municipality’s balance sheet that is dedicated to money reserved for long-term or large-scale projects.
  2. Markets

    A Primer On Reserve Currencies

    For nearly a century, the U.S. dollar has served as the world's premier reserve currency, but the future is uncertain.
  3. Markets

    How The U.S. Government Formulates Monetary Policy

    Learn about the tools the Fed uses to influence interest rates and general economic conditions.
  4. Markets

    The Federal Reserve: Monetary Policy

    The term monetary policy refers to the actions that the Federal Reserve undertakes to influence the amount of money and credit in the U.S. economy. Changes to the amount of money and credit affect ...
  5. Investing

    Evaluating A Company's Capital Structure

    Learn to use the composition of debt and equity to evaluate balance sheet strength.
  6. Markets

    Canada And Australia Dollars To Be Reserve Currencies

    The IMF upgrading the Canadian and Australian dollars to "official" reserve currency status is a recognition of reality.
  7. Markets

    What is a Loan Loss Provision?

    Banks set aside loan loss provisions to cover losses from bad loans.
  8. Investing

    What Does Debit Mean?

    Debit is an accounting term used to refer to the left side of an accounting journal entry. Each debit must be offset by an equal credit entry.
  9. Markets

    Credit And Debt Management: Introduction

    by Cathy ParetoAmerica is addicted to debt. Just call us the credit nation, from the highest levels of government all the way down to Main Street USA. America and Americans are obsessed with ...
  10. Personal Finance

    Find Security In Covered Bonds

    Find out about a safe investing alternative that could have prevented the subprime meltdown.
RELATED FAQS
  1. Who determines the reserve ratio?

    Understand what the Federal Reserve is and what it regulates in the U.S. economy. Learn about the reserve ratio and how the ... Read Answer >>
  2. How are bank reserve requirements determined and how does this affect shareholders?

    Learn how bank reserve requirements are determined and how bank reserves affect shareholders through improved bank stability ... Read Answer >>
  3. How do central banks acquire currency reserves and how much are they required to ...

    A currency reserve is a currency that is held in large amounts by governments and other institutions as part of their foreign ... Read Answer >>
  4. What do banks do to control the bank reserve?

    Understand what the Federal Reserve does in order to expand or contract the economy. Learn what depository institutions can ... Read Answer >>
  5. Why would the Federal Reserve change the reserve ratio?

    Understand the Federal Reserve's monetary policy and the tools it uses to change that monetary policy. Learn about the reserve ... Read Answer >>
  6. Which nations' economies have reserve ratios?

    Learn more about the inconsistent imposition of depository banking reserve ratios, and why the United States stands alone ... Read Answer >>
Hot Definitions
  1. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  2. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  3. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  4. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  5. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  6. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
Trading Center