FINANCIAL STATEMENT GLOSSARY
H HUDSON INDEMNITY, LTD.
LIABILITY A certain or probable future sacrifice of economic benefits arising from present obligations of a particular entity to transfer assets or to provide services to other entities in the future as a result of a past transaction(s) or event(s). LOSS ADJUSTMENT EXPENSES PAID Claim payments for the costs in connection with the adjustment and settlement of losses. LOSS FUND BALANCE Loss fund premiums and assessments received less loss fund losses paid for all open underwriting years. Also included in this balance is any interest earned for these open underwriting years. LOSS FUND PREMIUMS EARNED The portion of written loss fund premium that represents coverage already provided. LOSSES PAID Payments made to settle a portion or all of a defined group of claims. O OCCURRENCE An event that results in an insurable loss. In some lines of business, such as liability, an occurrence is distinguished from an accident in that the loss doesn’t have to be sudden and fortuitous and can result from continuous or repeated exposure which results in bodily injury or property damage, neither expected nor intended by the policy holder. P PAID-IN CAPITAL The sum of cash collateral and non-working deposits. PREMIUM RECEIVABLE Loss fund premiums for inforce policies that may be billed and due or may be due in the future based on the policy holder’s installment plan.
A Cayman Islands captive reinsurer and a consolidated subsidiary of National Interstate Corporation. Hudson is “rented” to program participants to facilitate the transfer of risk to the participants. I INCURRED BUT NOT REPORTED LOSSES (IBNR) Claims that have occurred, but the insurer has not been notified of them at the financial reporting date. Estimates are established to book these claims utilizing actuarial methods. In addition, IBNR may include losses that have been reported, but the loss ultimate value is unknown as all information regarding the claim situation is unknown. INCURRED LOSSES The total amount of paid claims and loss reserves associated with a particular time period. INSURANCE COMPANY The insuring company underwriting and pricing the risk, issuing the policies, and adjusting the claims of a captive program. These insurance companies include National Interstate Insurance Company, National Interstate Insurance Company of Hawaii, Triumphe Casualty Company, and Vanliner Insurance Company. INTEREST INCOME Interest earned on a captive program’s loss fund and cash collateral balances, calculated using a guaranteed annual interest rate. INVESTMENTS An asset or similar item that is purchased with the intention that it will generate income or appreciate in the future. L LETTER OF CREDIT (LOC) A financial instrument issued by a bank which guarantees the availability of funds upon request by the beneficiary.
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