Financial Statement

What Does Financial Statement Mean?

In the context of insurance, a financial statement is the official record of the financial activities, transactions, and positions of an individual, organization, or company. Underwriters use this document to evaluate the insurability of the entity, assess its ability to pay premiums and determine its commitment to loss control.

A financial statement is also referred to as a financial report.

Insuranceopedia Explains Financial Statement

A financial statement serves to provide insights into the financial performance of an individual or group over a specific period. There are four primary types of financial statements:

1. Statement of Financial Position (or Balance Sheet)
2. Income Statement (or Profit and Loss Report)
3. Cash Flow Statement
4. Statement of Changes in Equity (or Statement of Retained Earnings)

Insurance regulators may review the financial statements of insurers under their oversight to ensure that these companies are not at risk of bankruptcy.