Kerper and Bowron LLC announced the formal publication of its patent-pending Kerper Bowron Method for service contract and extended warranty accounting in the peer-reviewed actuarial journal Risks (MDPI), alongside a feature in Business Alabama, the state’s leading business publication.
The Kerper Bowron Method has garnered attention from financial institutions, service contract administrators, and insurance professionals due to its focus on contract-level precision in loss projection and revenue recognition. The method, which replaces industry-standard aggregate earning approaches, uses month-by-month probabilistic cash-flow projections for each individual contract. It draws on point-of-sale data, including term, mileage, coverage, deductible, vehicle profile, and price, to generate auditable, contract-specific accounting that adapts to actual experience.
This academic validation by Risks (MDPI) addresses challenges across multiple regulatory frameworks, including Solvency II, IFRS 17, and ASC 606, significantly improving accuracy in loss estimation, cancellation forecasting, and revenue recognition. The subsequent feature in Business Alabama highlighted the method’s origins within Birmingham’s emerging fintech ecosystem.
John Kerper, FSA, MAAA, co-founder of Kerper and Bowron LLC, stated, “When we introduced the Kerper Bowron Method, we believed the industry was ready for a more precise approach to service contract accounting. The peer review acceptance and the Business Alabama feature confirm that belief.”
Founded in 2003 by John Kerper and Lee Bowron, Kerper and Bowron LLC is an actuarial, accounting, and insurance consulting firm specializing in the F&I industry. The firm’s expertise includes reinsurance, pricing, loss projections, cash flow projections, and financial reporting. Irish Trinity LLC, established in 2025, developed the intellectual property for the Kerper Bowron Method.
Lee Bowron, ACAS, MAAA, remarked on the method’s potential, saying, “Much like Black-Scholes revolutionized options pricing, the Kerper Bowron Method has the potential to become the defining financial framework for the service contract space. Extensions of this technique will open significant new lending opportunities across the United States and create entirely new derivative markets, while fundamentally reducing capital allocation.”
