What Is A Capital Maintenance Agreement

December 20, 2020 admin

Excerpt from: Capital Conservation Concept in A Dictionary of Accounting “The concept can have a more serious impact on non-profit organizations. State law or donor agreements may require that foundation balances not be lost, meaning that assets from other sources must be replenished during periods when the income of the invested funds is negative. This can result in a significant decrease in the resources available for operational needs. The definition of material preservation of capital implies that a company only makes a profit if its production or operating capacity, at the end of a period, exceeds capacity at the beginning of the period, with the exception of contributions or distributions from the owners. After maintaining the financial capital, a company only makes a profit if, at the end of a period, the amount of its net assets exceeds that of the beginning of the period. This excludes inflows or outbound to owners, such as contributions and distributions. It can be measured either in nominal monetary units or in constant purchasing power units. Capital retention, also known as capital recovery, is an accounting concept based on the principle that a company`s revenues should not be accounted for until the costs are recovered or its capital has been maintained. A company obtains capital maintenance if, at the end of a period, the amount of its capital remains unchanged from that at the beginning of the period. Each senior surplus represents the company`s profit.

15. This agreement constitutes the entire oral or written agreement reached between the parties with respect to the purpose of this agreement and replaces all prior and simultaneous oral or written agreements, agreements and conversations between the parties. This agreement may be amended at any time by written agreement or by the instrument signed by the parties. (3) To avoid any doubt, the terms “Total Adjusted Capital,” “Company Action Level RBC” and “Surplus to Policyholders” the importance attributed to them by the laws and regulations on home insurance, or, with respect to “Total Adjusted Capital” and “Company Action Level RBC,” unless defined, have the meanings defined in the national association of insurance commissioners` (“RBC”) capital instructions based on risk(“) The term “minimum specified percentage” is the percentage attached to Schedule 1, agreed by AIG and the Company at least once a year from the date of the company`s submission153s 2010 Annual declaration to the Department of State Insurance153s and after review of the capital standards and criteria (“agency criteria”) of each Standard and Poor15s Corp.

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