Description: This paper demonstrates some of the basic principles and concepts inherent in the use of natural reserves to adjust earnings and to demonstrate differences in earning patterns obtained by several alternative approaches to a pure natural reserve adjustment of earnings.

Description: The purpose of this paper note is to highlight the similarities of results from the amortization of initial life insurance acquisition costs by means of an acquisition cost amortization schedule similar to that used by accountants versus a set of actuarial-type acquisition cost natural reserve factors appropriately applied to beginning and ending in-force units.