when an insurance company underwrites a new policy it is paid a premium by the policyholder these premiums are deposited into the insurer s general account the insurer will use these funds in a variety of ways it will set aside a portion as a loss reserve which is used to cover the estimated losses it expects may occur over the course of the year it will also use these funds to pay for operations personnel and other business expenses in order to increase profitability however it will also invest some of these premiums in assets of various risk profiles and liquidities 
insurers are less likely to invest in equities and options than they are to invest in fixed income or real estate assets held in the general account are owned by the general account and are not attributed to a specific policy but rather to all policies in aggregate the insurer may choose however to create separate accounts to set aside assets for specific policies or liabilities assets in the separate accounts are designed to cover the policy risks associated with the separate account though if the separate account s assets are ultimately determined to be insufficient the insurer may use general account funds to fill any gaps general account investing strategyassets found in the general account may be managed internally or the management may be provided by a third party increased global competition and changing products with aggressive pricing and guarantees have forced many insurance company executives to reevaluate their traditional investing strategy for general account funds the risk appetite for insurance companies tends to be relatively low because they have to guarantee that funds are available to cover liabilities the general account investment portfolio typically contains investment grade bonds and mortgages due to volatility common stock is less widely included in general account portfolios and by year end 2020 comprised 13 2 of overall investment portfolios for insurance carriers 1