Principles that guide and standardize financial accounting practices, such as how a firm prepares and presents its business income, expenses, assets and liabilities. Examples of accounting standards are: Statutory accounting practices (Stat) Generally Accepted Accounting Principles for financial reporting (GAAP) International Financial Reporting Standard (IFRS)
Interest earned but not received (realized). For example, bonds usually pay interest every six months in form of coupon, therefore interest accrues between one interest payment and the next. The buyer of a bond pays its market value plus the interest earned up to the settlement date of the coupon.
An actuarial value is a numerical value assigned to a given set of actuarial risks that is determined using an actuarial model of those risks. The percentage of total average costs for covered benefits that a plan will cover. For example, if a plan has an actuarial value of 70%, on average, you would be responsible for 30% of the costs of all covered benefits.
A reserve account opened at the discretion of the insurer if it believes the amount of funds kept in the unearned premium reserve account is not sufficient to cover the amount of risk perceived. While unearned premium reserve minimums are set by law, an unexpired risk reserve is voluntary. Source: businessdictionary.com
Allocated loss adjustment expenses (ALAE) are attributed to the processing of a specific insurance claim. ALAE are part of an insurer's expense reserves. It is one of the largest expenses for which an insurer has to set aside funds (along with contingent commissions). Loss adjustment expenses that are assignable or allocable to specific claims. Fees paid to outside attorneys, experts, and investigators used to defend claims are examples of ALAE.
The annual basis of accounting for general insurance business is considered to be an accrual method. A result is determined at the end of the accounting period reflecting: Profit or loss from providing insurance cover during that period (including the anticipation of losses arising from cover to be provided in subsequent periods in respect of business written prior to the end of the accounting period) Adjustments to the profit and loss from business written during earlier accounting periods Depending upon the product, this method may take into account projection of the deferral of acquisition
The appraisal value of an insurance company is the sum of the embedded value of the company and the value to its shareholders of the future profits they expect to receive from future new business. The latter part of the appraisal value is often referred to as the "goodwill" value of the company.