Retained earnings

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Retained earnings

Accounting earnings that are retained by the firm for reinvestment in its operations; earnings that are not paid out as dividends.

Undistributed Profits

The amount of a publicly-traded company's post-tax earnings that are not paid in dividends. Most earnings retained are re-invested into the company's operations. Year-on-year tracking of the ratio of undistributed profits to dividends is important to fundamental analysis to investigate whether a company is increasing or decreasing its rate of re-investment. Undistributed profits form part of a company's equity, and are owned by shareholders. They are also called retained earnings, accumulated profits, undivided profits, and earned surplus.

retained earnings

The accumulated net income that has been retained for reinvestment in the business rather than being paid out in dividends to stockholders. Net income that is retained in the business can be used to acquire additional income-earning assets that result in increased income in future years. Retained earnings is a part of the owners' equity section of a firm's balance sheet. Also called earned surplus, surplus, undistributed profits. See also accumulated earnings tax, restricted retained earnings, statement of retained earnings.

Retained earnings.

Retained earnings, also known as retained surplus, are the portion of a company's profits that it keeps to reinvest in the business or pay off debt, rather than paying them out as dividends to its investors.

Retained earnings are one component of the corporation's net worth and increase the supply of cash that's available for acquisitions, repurchase of outstanding shares, or other expenditures the board of directors authorizes.

Smaller and faster-growing companies tend to have a high ratio of retained earnings to fuel research and development plus new product expansion. Mature firms, on the other hand, tend to pay out a higher percentage of their profits as dividends.

References in periodicals archive ?
Estimate retained losses at higher confidence levels (to assess variability of results).
We should also have to reduce par value to wipe out retained losses.
With this protection over aggregated retained losses, the insured may also take a higher retention and save risk transfer premium dollars," says O'Brien.
7% of company's total equity, excluding Pemex policy in which retained losses can reach 4%.
This is the lowest number for companies since 2001 and came due to lower premiums and retained losses (especially within workers comp and D&O).
During a merger, it's important that the risk manager from the acquiring company confer with his counterpart to determine the other company's perception of risk, what model they have been using, whether they have a more conservative posture toward limits and retained losses, and if" they have identified and dealt well with all their exposures, said Austin, now principal and consultant at Austin & Stanovich Risk Managers LLC, Douglas, Mass.
Increasing risk retention generally leads to a lower expected cost of risk (defined as the expected cost of retained losses and the cost of risk transfer).
Consolidated financial results have been weak, demonstrated by retained losses between 2008 and 2011 of USD 144 million.
Based on the information available and evaluations to date, Aspen estimates that its retained losses from Hurricanes Katrina, Rita and Wilma, after recoveries from its outwards reinsurance program and the impact of outwards and inwards re-instatement premiums, are likely to be between $470 million and $535 million on an after tax basis, which includes its initial loss estimate from Hurricane Wilma of between approximately $20 million and $35 million and an increase of approximately $27 million with respect to losses associated with Hurricanes Katrina and Rita.
The latter, known as "top and drops," provide protection in either a single severe event exhausting excess-of-loss layers, or in an accumulation of retained losses from several events.
If the policy costs $700,000, and still leaves the policyholder with a hedged risk having discounted expected retained losses of $900,000, which requires capital support of an additional of $2 million, then the ECOR after insurance can be estimated as:
Premiums decreased slightly while retained losses rose slightly.