SAMPLE 5 – My revisions
ABC Insurance’s liquidity requirements vary among the principal product lines.
Life insurance and pension plan reserves are primarily longer-term liabilities. Reserve requirements are usually stable and predictable, and are supported primarily by medium-term, fixed-income investments.
Property and casualty and accident and health reserves, including long-term disability, consist of both short-term and long-term liabilities. These claim demands are less predictable in nature, so the investment portfolio must provide some liquidity.
Accident and health claim demands are stable and predictable, but generally shorter term. Satisfying these claims also requires liquidity.