DEFINITION of 'Voluntary Reserve'

Monetary reserves voluntarily held by insurance companies. Government agencies often regulate the reserve requirements of financial institutions and insurance companies to ensure their solvency. Voluntary reserves are additionally held liquid assets.

BREAKING DOWN 'Voluntary Reserve'

Insurance companies hold voluntary reserves to appear to be more financially stable and improve their liquidity ratios. Such requirements are often internally agreed upon and not decided by law.



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  4. What are the differences between solvency ratios and liquidity ratios?

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