Insurers may also hold catastrophe reserves or other claims equalisation reserves.
Catastrophe Reserves — reserves on a captive’s balance sheet that are for paying neither known nor incurred but not reported (IBNR) losses. The ideal would be to build up these catastrophe reserves for the rainy day when they will be needed.
We are not learning how to calculate Cat Reserves here. The definitions are for knowledge purpose and you should be aware of all the reserves that you may come across later.
Claim Equalisation Reserves