How much money does an insurance company have to have in reserve under the legal reserve system?

Enough to meet all of their contractual obligations to policyholders. This includes guaranteed minimum interest rate calculations on all permanent life insurance and fixed annuity contracts. It also includes all obligations under term insurance policies that are in good force= premiums are up to date. The statutory accounting system enforced under the legal reserve system is what protects policy holders. Note that banks and brokerage firms have been able to 'play games' under the GAAP [generally accepted accounting procedures] guidelines, which is a serious part of the current economic mess.

Thank God, that insurance is state regulated and structured under this legal reserve system; can you imagine the turmoil if the feds regulated insurance and used GAAP!

Recent rulings by the SEC, as well as the latest appointment by the new administration to have Mary Schapiro (formerly head of FINRA) is a serious threat to the continued sanctity and safety of our legal reserve insurance system in America. Ms. Schaprio and her staff at FINRA failed miserably to control the egregious actions of the brokerage industry as part of the mortgage securitization mess in America. The brokerage firms have a very strong 'lobby'. There is a serious threat to the financial future of our nation, and it rests not government printing largesse in the form of supposed "stimuli" packages. It rests with the effort already underway for the Federal Government to step in and re-regulate the insurance industry. The state insurnace commissioners under [NAIC] have a real test of courage coming. Let's pray that they are up to the task.