adverse deviation

  • A company calculating the reserves in conformity with generally accepted accounting principles should develop its own factors based on assumptions that are reasonably conservative and that include provision for the risk of adverse (unfavorable) deviation from such assumptions (mortality, interests, withdrawals, and expenses). A provision for the risk of adverse deviation implies that appropriate degrees of conservatism have been considered in determining actuarial assumptions that are reasonable and realistic.

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).