Security Valuation

What Does Security Valuation Mean?

Security valuation is a process in which regulators assess the safety and risk associated with the securities that an insurance company has on its books. The purpose of doing this is to make sure that the insurance company is not exposed to high levels of risk, thereby putting policyholders in danger of massive losses.

Insuranceopedia Explains Security Valuation

There are large problems associated with an insurance company becoming insolvent. The financial collapse of an insurer can cause their policyholders to lose a lot of money and they might also fail to be reimbursed for insured losses. Because of this risk, state regulators keep a close eye on insurance companies to make sure that they are not acting irresponsibly. A security valuation is one of the key ways that they do this.