What Is Losing Your Shirt? Losing your shirt is an idiom that, in the investment world, means to lose one’s money, savings, investments, resources, or more, if investments were made with borrowed funds. Losing your shirt is a 20th-century phrase that signals great financial loss. One may say, for example, “He lost his shirt in
What Is Loss And Loss-Adjustment Reserves To Policyholders’ Surplus Ratio? Loss and loss-adjustment reserves to policyholders’ surplus ratio is the ratio of an insurer’s reserves set aside for unpaid losses. This may also include the cost of investigation and adjusting for losses to its assets after accounting for liabilities. Also called the reserves to policyholders’
What Is a Loss Carryback? A loss carryback describes a situation in which a business experiences a net operating loss (NOL) and chooses to apply that loss to a prior year’s tax return. This results in an immediate refund of taxes previously paid by reducing the tax liability for that previous year. Key Takeaways A
What Is a Loss Carryforward? A loss carryforward refers to an accounting technique that applies the current year’s net operating loss (NOL) to future years’ net income to reduce tax liability. For example, if a company experiences negative net operating income (NOI) in year one, but positive NOI in subsequent years, it can reduce future
What Is Loss Cost? Loss cost, also known as pure premium or pure cost, is the amount of money an insurer must pay to cover claims, including the costs to administer and investigate such claims. Loss cost, along with other items, is factored in when calculating premiums. Key Takeaways Loss cost is the total amount
What Is Loss Development? Loss development is the difference between the final losses recorded by an insurer and what the insurer originally recorded. Loss development seeks to account for the fact that some insurance claims take a long time to settle, and that estimates of the total loss an insurer will experience will adjust as
Losses and loss adjustment expense is the portion of an insurance company’s reserves set aside for unpaid losses and the costs of investigation and adjustment for losses. Reserves for losses and loss adjustment expenses are treated as liabilities. This figure also includes estimates for losses for insurance ceded to reinsurers. Breaking Down Losses and Loss-Adjustment Expense Insurance
What Is Loss Given Default (LGD)? Loss given default (LGD) is the estimated amount of money a bank or other financial institution loses when a borrower defaults on a loan. LGD is depicted as a percentage of total exposure at the time of default or a single dollar value of potential loss. A financial institution’s
What Is a Loss Leader Strategy? A loss leader strategy involves selling a product or service at a price that is not profitable but is sold to attract new customers or to sell additional products and services to those customers. Loss leading is a common practice when a business first enters a market. A loss
What Is Loss Management? The term loss management refers to a set of business practices that are used to monitor, detect, correct, or control sources of financial damage to a company’s earnings. Improvements aimed at loss management involve changes in a business’s operating policies, processes, and practices in order to minimize instances of loss. As
