Publication Type
Working Paper
Publication Date
1-2018
Abstract
This paper examines whether the adoption of the Statement of Statutory AccountingPrinciples (SSAP) 101, a new accounting standard that significantly limits management’sdiscretion in both the recognition and measurement of tax contingencies, affects the lossprovisions of property-casualty (PC) insurers. We find that PC insurers significantly reducetheir loss provisions after SSAP 101 adoption, particularly those with greater ex anteexposure to SSAP 101, consistent with reduced incentives to establish loss reserves for taxpurposes. Additionally, PC insurers with greater exposure to SSAP 101 show increasedearnings persistence and decreased returns on asset volatility, suggesting improved insurertransparency and an improved overall risk profile via tax avoidance mitigation. Overall, ourstudy offers important insight into the economic effects of accounting standards in theinsurance industry.
Keywords
Loss provisions, Corporate taxation, Insurance companies, SSAP 101
Discipline
Accounting
Research Areas
Corporate Reporting and Disclosure
First Page
1
Last Page
56
Citation
CHENG, Jiang; CHOW, Travis K.; LIN, Tzu-Ting; and NG, Tee Yong Jeffrey.
The effect of SSAP 101 on loss provisioning by property-casualty insurers. (2018). 1-56.
Available at: https://ink.library.smu.edu.sg/soa_research/1791
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
http://abfer.org/media/abfer-events-2019/annual-conference/accounting/AC19P5011_The_Effect_of_SSAP_101_on_Loss_Provisioning_by_Property-Casualty_Insurers.pdf