BROWSE

Valuation Reserve

What is '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.

Explaining '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.


Further Reading


Option valuation of claims on real assets: The case of offshore petroleum leases
academic.oup.com [PDF]
… rates and operating costs, quality of hydrocarbons and tax regime as for the tract being valued … into the market continuously, then in an efficient market participants must update their expectations and valuations continuously … OPTION VALUATION OF CLAIMS ON REAL ASSETS …

Estimating willingness to pay for environment conservation: a contingent valuation study of Kanas Nature Reserve, Xinjiang, ChinaEstimating willingness to pay for environment conservation: a contingent valuation study of Kanas Nature Reserve, Xinjiang, China
link.springer.com [PDF]
… rates and operating costs, quality of hydrocarbons and tax regime as for the tract being valued … into the market continuously, then in an efficient market participants must update their expectations and valuations continuously … OPTION VALUATION OF CLAIMS ON REAL ASSETS …

Valuation of international oil companiesValuation of international oil companies
www.iaee.org [PDF]
… rates and operating costs, quality of hydrocarbons and tax regime as for the tract being valued … into the market continuously, then in an efficient market participants must update their expectations and valuations continuously … OPTION VALUATION OF CLAIMS ON REAL ASSETS …

International reserves and the global financial crisisInternational reserves and the global financial crisis
www.sciencedirect.com [PDF]
… rates and operating costs, quality of hydrocarbons and tax regime as for the tract being valued … into the market continuously, then in an efficient market participants must update their expectations and valuations continuously … OPTION VALUATION OF CLAIMS ON REAL ASSETS …

Financial valuation of guaranteed minimum withdrawal benefitsFinancial valuation of guaranteed minimum withdrawal benefits
www.sciencedirect.com [PDF]
… rates and operating costs, quality of hydrocarbons and tax regime as for the tract being valued … into the market continuously, then in an efficient market participants must update their expectations and valuations continuously … OPTION VALUATION OF CLAIMS ON REAL ASSETS …

The market valuation effects of reserve regulationThe market valuation effects of reserve regulation
www.sciencedirect.com [PDF]
… rates and operating costs, quality of hydrocarbons and tax regime as for the tract being valued … into the market continuously, then in an efficient market participants must update their expectations and valuations continuously … OPTION VALUATION OF CLAIMS ON REAL ASSETS …

International currency exposures, valuation effects and the global financial crisisInternational currency exposures, valuation effects and the global financial crisis
www.sciencedirect.com [PDF]
… rates and operating costs, quality of hydrocarbons and tax regime as for the tract being valued … into the market continuously, then in an efficient market participants must update their expectations and valuations continuously … OPTION VALUATION OF CLAIMS ON REAL ASSETS …

International reserves and the global financial crisisInternational reserves and the global financial crisis
www.nber.org [PDF]
… rates and operating costs, quality of hydrocarbons and tax regime as for the tract being valued … into the market continuously, then in an efficient market participants must update their expectations and valuations continuously … OPTION VALUATION OF CLAIMS ON REAL ASSETS …

Valuing large engineering projects under uncertainty: private risk effects and real optionsValuing large engineering projects under uncertainty: private risk effects and real options
www.tandfonline.com [PDF]
… rates and operating costs, quality of hydrocarbons and tax regime as for the tract being valued … into the market continuously, then in an efficient market participants must update their expectations and valuations continuously … OPTION VALUATION OF CLAIMS ON REAL ASSETS …



Q&A About Valuation Reserve


What does traditional balance of payment identity ignore?

Traditional balance of payments identity ignores valuation effects, only recognizes that changes in net foreign assets are fully captured by current account.

What was required prior to 1992?

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, requirements set forth by MSVR were transferred into asset valuation reserves.

Why does life insurance require a securities valuation reserve?

Life insurance contracts can be in effect for long periods of time, and the securities valuation reserve is intended to protect loss reserves in the event that investments are under-performing.

What is the purpose of a valuation reserve?

A valuation reserve is set aside to compensate for declines in the value of investment instruments that are held by an insurance company as assets.

How does new balance of payment identity consider asset price changes and valuation effects?

New balance of payments identity considers role of asset price changes and valuation effects. Changes in net foreign assets equal current account plus valuation effects.

Where do you find information about valuations reserves?

You can find information about valuations reserves on your annual statement from your life insurer or on your state's website if you live outside of California.

What is a valuation reserve?

A valuation reserve is the change in value of assets held abroad, minus the change in value of domestic assets held by foreign investors.