Uncertainty of Claims Provisions from the Analysis of Financial Statements

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Roberto Bomgiovani Cazzari
https://orcid.org/0000-0001-8751-0203 orcid
Guilherme Rodovalho Fernandes Moreira
https://orcid.org/0000-0002-1476-0954 orcid


Objective: considering the current level of transparency in the financial statements of Brazilian insurers, this study sought to assess whether it was possible to estimate the sufficiency of the claims reserves estimated by it. As they are liabilities with an uncertain term or amount, the estimates of these reserves may be underestimated (compromising the insurers) or overestimated (burdening the shareholders), which justifies the research question. Methods: after analyzing the financial statements of 31 insurance companies in Brazil, it was noted that the criteria for disclosing claims development varied substantially. Thus, five insurers were selected that adopted similar procedures and allowed the application of the bootstrapping model to estimate the sufficiency level of the provisions. Results: the application of the model revealed that there are indications that insurers can make use of earnings management through the estimations of the claims reserves, spreading the burden of claims insufficiency risk differently between policyholders and shareholders. Conclusion: there are differences in the relative amount of claims recognized by the insurers, showing a possible earnings management practice being applied through the claims measurement.


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Cazzari, R. B., & Moreira, G. R. F. (2021). Uncertainty of Claims Provisions from the Analysis of Financial Statements. Journal of Contemporary Administration, 26(3), e200400. https://doi.org/10.1590/1982-7849rac2022200400.en
Theoretical-empirical Articles


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