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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RELATED FAQS
  1. What is the difference between compulsory and voluntary liquidation?

    Learn about the primary differences between voluntary liquidation and compulsory liquidation, two ways of selling off company ... Read Answer >>
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  3. How are bank reserve requirements determined and how does this affect shareholders?

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