A Teaching Note for Risk Management and Insurance Instructors and Students: Statutory Accounting Example for a Life Insurance Firm.

In the U.S., each state requires life insurance firms to file financial statements using Statutory Accounting Principles (SAP). A limited number of published resources exist to explain to instructors and students in risk management and insurance courses the application of SAP. We provide a teaching note using a simple example of balance sheet and income statement entries for a life insurance firm filing financial statements using SAP guidelines. Additionally, we demonstrate the balance sheet calculation of "policy reserves" of an insurance firm, and also guide the student through implementation of SAP.