Question

A property–casualty insurer brings in $6.28million in premiums on its homeowners MP line of insurance. The line’s losses amount to $4,383,440, expenses are $1,620,240, and dividends are $175,840. The insurer earns $238,640 in the investment of its premiums. Calculate the line’s loss ratio, expense ratio, dividend ratio, combined ratio (after dividends), investment ratio, operating ratio, and overall profitability. (Do not round intermediate calculations. Round your answers to 1 decimal place. (e.g., 32.1))

Loss ratio	%
Expense ratio	%
Dividend ratio	%
Combined ratio	%
Investment ratio	%
Operating ratio	%
Overall profitability	%

Answer 1

			Calculation	answers in %
A	Loss ratio	line loss amt/Premium*100	$4383440/6280000*100	69.8
B	Expense ratio	expenses/Premium*100	1620240/6280000*100	25.8
C	Dividend ratio	dividend/Premium*100	175840/6280000*100	2.8
D	Combined ratio	A+B+C	69.8+25.8+2.8	98.4
E	Investment ratio	Earnings/Premium*100	238640/6280000*100	3.8
F	Operating ratio	D-E	98.4-3.8	94.6
	Overall profitability	100-f%	100-94.6%	5.4
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