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Foundations of Casualty Actuarial Science

110. The indicated loss reserve is the result of the actuarial
analysis of a reserve inventory as of a given accounting
date conducted as of a certain valuation date.

111. The carried loss reserve is the amount of unpaid claim
liability shown on external or internal financial
statements.

112. The loss reserve margin is the difference between the
carried reserve and the required reserve.

113. The Casualty Actuarial Society (CAS) has published a
statement of principles regarding property and casualty
loss and loss adjustment expense reserves. There are
four basic principles.

The first principle says that an actuarially sound loss
reserve "for a defined group of claims as of a given
valuation date is a provision, based on estimates derived
from reasonable assumptions and appropriate actuarial
methods, for the unpaid amount required to settle all
claims, whether reported or not, for which liability exists
on a particular accounting date."

The second principle says an actuarially sound loss
adjustment expense reserve has the same characteristics

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