Loss reserve
The loss reserve , sometimes also referred to as a reserve fund , is a reserve to be formed by mutual insurance associations in accordance with Section 193 Insurance Supervision Act (VAG) in order to be able to cover extraordinary losses. The loss reserve is part of the revenue reserve and is therefore part of the company's equity . The amount and the annual contribution must be determined in the statutes of the VVaG.
The regulation of § 193 VAG reads: loss reserve. The articles of association must stipulate that a reserve (loss reserve, reserve fund) is to be set up to cover an extraordinary loss from business operations, which amounts are to be set aside annually and which minimum amount the reserve must reach.
