- A store of money kept aside for some future obligation. Banks must hold in reserve enough money to cover the deposits and withdrawals made by their customers, or likewise, an insurance company must keep enough money liquid in order to pay future insurance claims.
equity reserve, operating reserve, financial reserve
Related Terms and Acronyms
- Bank Reserves — Definition,
- Banks' holdings of deposits.
- Conditional Reserves — Definition,
- Reserves that are considered liabilities.
- General Account (GA) — Acronym, Very Important,
- Investments and assets that an insurer uses for paying benefits and claims.
- Loss Reserve — Definition,
- A reserve of money and liquid assets set aside by an insurer for the payment of claims that have been submitted but have yet to be paid out.
- Premium Balances — Definition,
- A ledger kept by insurance companies recording insurance premiums.
- Self Insurance — Definition,
- Setting aside money or assets for a potential future loss.