Reserve Valuation

Valuation reserves are assets that insurance companies set aside per state law to mitigate the risk of declines in the value of investments they hold. They function as a hedge to an investment portfolio and ensure that an insurance company remains solvent.
Because policies such as life insurance, health insurance, and various annuities may be in effect for extended periods of time, valuation reserves protect the insurance company from losses from investments that may not perform as expected. This helps ensure that the policyholders are paid for claims and that annuity holders receive income even if an insurance company’s assets lose value.

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