Voluntary Reserve

AAA

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.

INVESTOPEDIA EXPLAINS '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.



RELATED TERMS
  1. Secondary Reserves

    Assets that are invested in safe, marketable, short-term securities ...
  2. Acid-Test Ratio

    A stringent indicator that determines whether a firm has enough ...
  3. Cash

    Legal tender or coins that can be used in exchange goods, debt, ...
  4. Current Ratio

    A liquidity ratio that measures a company's ability to pay short-term ...
  5. Liquidity Ratios

    A class of financial metrics that is used to determine a company's ...
  6. Degree Of Relative Liquidity - ...

    A liquidity metric that looks at a company's ability to support ...
Related Articles
  1. Why China's Currency Tangos With The ...
    Forex Education

    Why China's Currency Tangos With The ...

  2. How The U.S. Government Formulates Monetary ...
    Personal Finance

    How The U.S. Government Formulates Monetary ...

  3. The Fed's New Tools For Manipulating ...
    Bonds & Fixed Income

    The Fed's New Tools For Manipulating ...

  4. Basel II Accord To Guard Against Financial ...
    Insurance

    Basel II Accord To Guard Against Financial ...

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center