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- Title
FINANCIAL ACCOUNTING PRACTICES OF PROPERTY AND LIABILITY INSURANCE COMPANIES.
- Authors
Anderson, John J.
- Abstract
A sample of annual financial reports to stockholders issued by stock property and liability insurance companies indicates that many insurers are deviating from statutory accounting methods in order to develop financial statements more in accord with generally accepted accounting principles. In addition the professional accounting community is currently considering a change in interpretation of these principles as they apply to the handling of equity securities. This paper analyzes current accounting practices and the possible impact of this contemplated change. The study was made using a computer model to explore the financial effects of these practices given various company growth rates, policy mixes, investment mixes and investment yields. The results indicate that, depending on these factors, very significant differences in such reported financial measures as net income and return on net worth may be generated by changes in accounting methods. The paper concludes by pointing out the possible significance of these findings for the insurance industry.
- Subjects
FINANCIAL statements; ACCOUNTING methods; LIABILITY insurance; PROPERTY insurance; STOCKHOLDERS
- Publication
Journal of Risk & Insurance, 1972, Vol 39, Issue 2, p201
- ISSN
0022-4367
- Publication type
Article
- DOI
10.2307/251880