Valuation Reserve

AAA

DEFINITION of 'Valuation Reserve'

The funds set aside by life insurers as required by state law to compensate for declines in the value of investment instruments that are held by the insurance company as assets. Valuation reserves are required because life insurance contracts can be in effect for long periods of time, and the securities valuation reserve is intended to protect the company's loss reserves in the event that the insurer's investments are under-performing.

INVESTOPEDIA EXPLAINS 'Valuation Reserve'

Prior to 1992, the mandatory securities valuation reserve (MSVR) required a liability reserve to be maintained by the National Association of Insurance Commissioners (NAIC) to protect against value changes in an insurance company's securities investments. Following 1992, the requirements set forth by the MSVR were transferred into the asset valuation reserve.

RELATED TERMS
  1. Asset Valuation Reserve - AVR

    Capital required to be set aside in order to cover a company ...
  2. Commissioners' Values

    Specific values that are assigned to securities as per the National ...
  3. Allowance For Bad Debt

    A valuation account used to estimate the portion of a bank's ...
  4. Life Insurance

    A protection against the loss of income that would result if ...
  5. National Association of Insurance ...

    A nationwide organization whose main responsibility is to protect ...
  6. Lloyd's Of London

    A British insurance market where members join hands as syndicates ...
Related Articles
  1. Is Your Insurance Company Going Belly ...
    Home & Auto

    Is Your Insurance Company Going Belly ...

  2. How An Insurance Company Determines ...
    Home & Auto

    How An Insurance Company Determines ...

  3. Are You Protected If Your Insurance ...
    Insurance

    Are You Protected If Your Insurance ...

  4. Should I pull my money out of an annuity ...
    Home & Auto

    Should I pull my money out of an annuity ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center