Asset Depreciation Risk

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Asset Depreciation Risk

In insurance, the risk of loss to the company as the result of declining investments. An insurance company generally maintains a portfolio of securities. If a stock declines or a bond defaults, it may find itself with fewer assets and the same number of liabilities. In the United States, state governments determine the investments insurance companies are allowed to make to reduce asset depreciation risk. It is one of four types of risk to an insurance company; the others are interest rate risk, pricing inadequacy risk, and general business risk. Asset depreciation risk is also called asset quality risk. See also: Legal list.
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