Statutory reserve

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In the business of insurance, statutory reserves are those liabilities an insurance company is legally required to maintain on its balance sheet with respect to the unmatured obligations (i.e., expected future claims) of the company.

Life insurance[edit]

In the U.S. life insurance industry, statutory reserves are most commonly computed using the Commissioner's reserve valuation method, or CRVM, the method prescribed by law for computing minimum required reserves.

The size of a CRVM reserve is affected by the age and sex of the insured person, how long the policy for which it is computed has been in force, the plan of insurance offered by the policy, the rate of interest used in the calculation, and the mortality table with which the actuarial present values are computed.

The Commissioner's reserve valuation method was itself established by the Standard Valuation Law (SVL), which was created by the NAIC and adopted by the several states shortly after World War II. The first mortality table prescribed by the SVL was the 1941 CSO (Commissioner's Standard Ordinary} table,[1] at a maximum interest rate of 3½%. Subsequent amendments to the Standard Valuation Law have permitted the use of more modern mortality tables and higher rates of interest. The effect of these changes has in general been to reduce the amount of the reserves which life insurance companies are legally required to hold.

See also[edit]


  1. ^ The 1941 CSO table was prescribed for policies of ordinary life insurance. For policies of industrial life insurance the SVL prescribed use of the 1941 CSI (Commissioner's Standard Industrial) table.


  • N. L. Bowers, H. U. Gerber, J. C. Hickman, D. A. Jones, & C. J. Nesbitt, Actuarial Mathematics, Society of Actuaries (1986). ISBN 0-938959-10-7

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