Life insurance companies must file annual convention statements in accordance with state laws. These statements include financial information on assets, liabilities, and surplus to ensure the company can honor policies and meet state standards.
Convention statements are documents that life insurance companies must file annually. These annual returns must be filed in accordance with the laws of each state where the life insurance company is licensed to do business. Additionally, each jurisdiction may require more than a general convention statement, either in terms of the layout of the data or the degree of detail included in the statement.
While the exact structure of the convention declaration can vary from instance to instance, there are some basic types of information that are universally included. For each annual statement, the life insurance company must include the current financial statement of the company by including details about the assets that are currently under the control of the corporation. This helps ensure that the company has the resources to support policies issued to people who are citizens of the jurisdiction.
Second, a convention statement will also include details about current liabilities as of the filing date. This information is essential to help a given jurisdiction further assess the overall financial stability of the life insurance company. When the liabilities are considered reasonable compared to the company’s assets, this is a sign that the company will remain viable for the next year. A stable level of viability means that the corporation will be able to honor all claims made against issued policies, assuming the claims are found to be valid.
Finally, the convention statement will include information about any surplus currently in the possession of the life insurance company. Essentially, the surplus can be any type of extras that are under the control of the corporation and could be used if liabilities start to exceed available assets. This helps add another layer of assurance that in-state consumers can reasonably expect insurance companies to honor policies currently in force.
The annual filing of a convention declaration is one way the government seeks to protect the interests of private citizens. By requiring the declaration to be filed annually, the state government ensures that insurance companies meet the standards necessary to operate within the jurisdiction.
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