Question

what is statutory reserve

Answer 1

In the businesses of insurance, statutory reserves are those assets an insurance company is legally required to maintain on its balance sheet with respect to the unmatured obligations of the company. Statutory Reserves are a type of actuarial reserve.

Answer 2

Explanation:

Reserves is money set aside by financial institutions such as insurance companies to cater for future obligations.

Statutory reserves are state - mandated reserves that an insurance company should hold in order to comfortably take care of future claims.

It is required by the state that an insurance holds reserves in form of assets, cash or security so as to be in a position to take care of future claims.

These assets should always be reflected on the financial statement of the insurance company.