Actuarial Gains And Losses

What Does Actuarial Gains And Losses Mean?

Actuarial gains are when an insurance company has to pay out less than anticipated in benefits in a given time period. Thus, its profit would be higher than it was expecting. Actuarial losses are when an insurance company must pay out more than it was expecting to. Actuarial losses reflect a lower profit than expected or possibly even a loss.

Insuranceopedia Explains Actuarial Gains And Losses

For insurance companies, actuaries make calculations to predict the amount of claims the company may have to pay out to policyholders in a given amount of time. Actuaries use highly complicated statistical analyses to come up with the necessary figures. However, they are not always correct. Sometimes, unpredictable things happen and many more or many fewer claims are filed. The amount of claims filed and paid out determines whether there are actuarial gains or losses.