Page 155 - ic92 actuarial

Foundations of Casualty Actuarial Science

It acts as an balancing item in the above equation.
Owners' equity is called the surplus of the insurer. For
stock companies, the stockholders are the owners, but
for mutual fund insurers, the policyholders are the owners
and the surplus belongs to them.

When liabilities exceed assets, the value of owners'
equity becomes negative, and the firm becomes
insolvent.
Owners' Equity = Assets - Liabilities

b) Income Statement - The income statement measures
changes in owners' equity during a given period of time.
Owners' equity can also be subdivided into the capital
contributed by the owners and any retained earnings of
the firm from the past periods.

So, Owners' Equity = Contributed Capital + Retained
Earnings

Revenue measures the inflow of assets from providing
products or services. Expense measures the outflow of

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