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]
- Estimating willingness to pay for environment conservation: a contingent valuation study of Kanas Nature Reserve, Xinjiang, China – link.springer.com [PDF]
- Valuation of international oil companies – www.iaee.org [PDF]
- International reserves and the global financial crisis – www.sciencedirect.com [PDF]
- Financial valuation of guaranteed minimum withdrawal benefits – www.sciencedirect.com [PDF]
- The market valuation effects of reserve regulation – www.sciencedirect.com [PDF]
- International currency exposures, valuation effects and the global financial crisis – www.sciencedirect.com [PDF]
- International reserves and the global financial crisis – www.nber.org [PDF]
- Valuing large engineering projects under uncertainty: private risk effects and real options – www.tandfonline.com [PDF]
