One life insurance company reserve is designed to smooth the company's reported surplus over time by absorbing fluctuations in security prices that are not attributable to changing interest rates.This reserve is called the
A)asset write-off reserve.
B)reserve for amounts held on deposit.
C)unearned premium reserve.
D)asset valuation reserve.

Question

Quizplus · Accepted Answer

The reserve described here is known as the asset valuation reserve. It serves to absorb fluctuations in security prices that are unrelated to changing interest rates, thereby smoothing out the company's reported surplus over time. This reserve is typically listed as a liability on the balance sheet, and is subject to regulatory oversight to ensure that it is adequately funded.

One Life Insurance Company Reserve Is Designed to Smooth the Company's