Business Education
Understanding Insurance Financial Statements



Reading and Analyzing Insurance Balance Sheets.

Insurance companies generally have very different methods of reporting balance sheet financial information from manufacturing and service organzations. This brief tutorial will give the reader pertinent information in analying an insurance company's operations. The following presents a chart showing the key differences with insurance company balance sheets.

Insurance Company Balance Sheets
Investments include short-term and long term investments that are generated from insurance premiums. Many of these investments assets are in safe, marketable instruments with high levels of safety to payout future claims.  
Reinsurance and Indemnification Recoverables

Reinsurance and idemnification recoverables are an insurance company's losses from claims that can be recovered from reinsurance companies. These recoverables may be among some of the largest assets on the original insurance company's balance sheet. Recoverables are generally considered liabilities for reinsurance companies.

    Liabilities ...  
Policy Liabilities

Policy liabilities are an insurance companies liabilities directly related to writing insurance premeiums for customers. Normally, they encompass the following in an insurance companies balance sheet but they can include other elements:

a) Losses, claims and settlement expenses
b) Unearned premiums
c) Other policyholder benefits and funds
d) = Policy Liabilities

U.S. Business Reporter merges the above accounts under one title called "Policy Liabilities " on our site.


Liabilities held for sale

These items are Non-current assets and liabilities that are classified as held for sale if it is highly probable that they will be realized through sale rather than continued use. These assets or disposal groups are recognized at the lower of there carrying amounts or fair values less costs to sell.