reserve deficiency

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Reserve Deficiency

A situation in which a company must meet some unexpected expenses, perhaps resulting in a shortage of cash. For example, a company may set aside a certain amount of funds to cover bad debt. If bad debt exceeds expectations, and the company must write off more funds than it intended, it is said to have a reserve deficiency. Reserve deficiencies reduce profits and may cause a problem with liquidity.

reserve deficiency

A shortage in funds set aside as a reserve for a specific purpose. For example, during a recession a firm may find the reserve fund covering allowance for bad debts deficient when the amount of bad debts exceeds expectations. A reserve deficiency will penalize the firm's profits if the firm has to set aside additional funds to offset the deficiency.
References in periodicals archive ?
Best expects that Anadolu's technical performance will improve, as the company has addressed the resultant reserve deficiencies.
Consolidating financial institutions may also enjoy the following: Relocation of branches/offices within one year in cases of duplication of branches in certain areas; installment payment of outstanding penalties in legal reserve deficiencies and interest on overdrafts with the BSP over a one-year period; reasonable period to comply with real estate loan limits; restructuring past due obligations with BSP over a 10-year period; concurrent officership between a merged or consolidated bank and another financial institution, and concurrent directorship between banks, and continued effectivity of right or privilege under a rehabilitation program or any special authority granted by the Monetary Board.
By the end of 2015, the Tower Group reported additional loss reserve deficiencies well above $400 million.
These banks will also not be imposed of legal reserve deficiencies and will be granted a moratorium on monthly payments due to the BSP for banks under rehabilitation.
In the next five years, Guy Carpenter said there is potential for reserve deficiencies to play an important role.
risk of further reserve deficiencies at Fondiaria Sai given its history
Prior year's reserve deficiencies are now mainly funded.
Given the significant reserve deficiencies that Lincoln has exhibited, A.
Flagging reserve deficiencies is a thankless task, however.
The Board also is amending the penalty provision of Regulation D, which is calculated based on the discount rate, to conform the calculation of penalties for reserve deficiencies to the new discount rate framework.
Sometimes this is actually the case, particularly where the company (or a generous parent) has made up severe loss reserve deficiencies.
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