The Characteristics and Valuation of Loss Reserves of Property Casualty Insurers

The extent to which management influences accounting recognized in financial statements and the extent to which investors are able to identify such influence are fundamental questions in financial reporting research. This study contributes to this literature by examining the characteristics and valuation of an important accrual recognized by property casualty insurance companies, the reserve for claim losses. This accrual reflects management’s information about future cash flows that will be required to settle claims on policies written as of the balance sheet date.