Kerper and Bowron LLC

400 Vestavia Parkway, Suite 131

Birmingham, AL 35216                   205-588-4028 (Main)

© 2019 by Kerper and Bowron LLC

April 16, 2014

For vehicle service contracts (VSCs), the earnings curve is a critical tool for financial reporting and experience evaluation. Typically, the earnings curve is a set of factors by month, which show how much of a contract should be earned.

When a company evaluates its financial results at the end of the year, each active contract will be aged from the months since purchase and the premium or reserve for that contract will be multiplied by this factor to calculate the earned reserve. For...

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