Compute the tax items specific to a property and casualty insurer, especially loss reserve discounting, and evaluate what they mean for the company.

Free CAS Exam 6-U.S. (Regulation and Financial Reporting) lesson in Financial Reporting, Taxation, and Professional Responsibilities of the Actuary. 15 min read, ~2,310 words.

Section 846 requires discounting unpaid loss and loss adjustment expense (LAE) reserves for tax; the deduction is the lesser of the discounted reserve or the statutory undiscounted reserve (the annual statement cap). Discounting accelerates taxable income (more income now), creating a deferred tax asset that reverses as reserves pay out...

What this lesson covers

• Content
• Example 1
• Example 2
• Common Mistakes
• Check Your Understanding
• Exam Shortcuts

Learning objectives

• C9

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