3-62 The largest liability category on the balance sheet of U.S.life insurance companies as of year-end 2009 was

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Net policy reserves reflect the present value of future obligations to policyholders for benefits and claims payments. This is typically the largest liability category for life insurance companies because it represents their primary obligation to their policyholders. Policy claims and premiums are also significant liabilities, but they are typically smaller in comparison to net policy reserves. Commission, taxes, and expenses are not liabilities, but rather expenses that are deducted from premiums to calculate operating income. Capital surplus is not a liability, but rather an equity category on the balance sheet.

3-62 the Largest Liability Category on the Balance Sheet of U.S.life