DEFINITION of ‘Unaffiliated Investments’

Unaffiliated investments are stocks, bonds, and other investment holdings in companies neither owned by the insurer nor companies that share joint ownership of securities with the insurer. Unaffiliated investments are often found in the financial statements of insurance companies.

BREAKING DOWN ‘Unaffiliated Investments’

Insurance companies use the proceeds from their underwriting activities for a number of different activities. They set aside funds as loss reserves to cover liabilities that they may incur from policyholders making a claim. They pay commissions to brokers who bring in new business, and pay operational expenses such as salaries, benefits, and overhead. They also use funds to invest in securities of various liquidities to try to increase the return on the premiums they receive.

Search for Yield

Insurers need to have funds available quickly in order to cover liabilities. In order to do this, they often make short-duration investments in highly liquid assets, and longer-term assets that may offer a higher return. Depending on the type of insurance policies underwritten an insurer’s liability to…