Gender Differences in Reserving Conservatism

North American Actuarial Journal, Forthcoming

Posted: 27 Aug 2021 Last revised: 24 Sep 2023

See all articles by Xin Che

Xin Che

California State University, Fullerton

Jianren Xu

University of North Texas

Date Written: September 9, 2023

Abstract

Given the rapidly growing industry-wide trends to promote diversity, we provide the first evidence that executive gender differences impact insurer corporate decisions by examining reserve management. In a sample of property-liability insurers with 34 unique female CEOs from 2007 to 2013, we find that female CEOs are associated with more conservative loss reserves. Economically, female CEOs over-reserve by 2.25 percent of total assets, relative to male CEOs. Our identification strategy relies on an instrumental variable approach and a difference-in-differences design based on a propensity-score matched sample. In an analysis of a subset of 13 unique female CEOs involved in turnovers, we find that reserving conservatism increases (decreases) following male-to-female (female-to-male) CEO turnovers compared with male-to-male turnovers. Our study provides economic implications for the industry-wide initiatives and is relevant to various stakeholders.

Keywords: Gender Differences; Loss Reserving Conservatism

JEL Classification: G22; G41

Suggested Citation

Che, Xin and Xu, Jianren, Gender Differences in Reserving Conservatism (September 9, 2023). North American Actuarial Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3893250 or http://dx.doi.org/10.2139/ssrn.3893250

Xin Che (Contact Author)

California State University, Fullerton ( email )

800 N State College St
Fullerton, CA 92831
United States

Jianren Xu

University of North Texas ( email )

1155 Union Circle #305340
Denton, TX 76203
United States

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