Question

An insurance company collected $4.1 million in premiums and disbursed $2.11 million in losses. Loss adjustment expenses amounted to 6.7 percent and dividends paid to policyholders totaled 1.7 percent. The total income generated from their investments was $170,000 after all expenses were paid. What is the net profitability in dollars?

Answer 1

Net Profitability = Premium Collected - Losses disbursed - Loss adjustment expenses - Dividend Paid +Income from Investment

Net Profitability = Premium Collected - Losses disbursed - (Premium Collected * Loss adjustment expenses %) - (Premium Collected * Dividend Paid %) + Income from Investment

Net Profitability = $4100000 - $2110000 - ($4100000 * 6.7%) - ($4100000 * 1.7%) + $170000

Net Profitability = $4100000 - $2110000 - $274700 - $69700 + $170000

Net Profitability = $1815600