Question

In: Finance

An insurance company collected $3.7 million in premiums and disbursed $1.97 million in losses. Loss adjustment...

An insurance company collected $3.7 million in premiums and disbursed $1.97 million in losses. Loss adjustment expenses amounted to 6.7 percent and dividends paid to policyholders totaled 1.3 percent. The total income generated from their investments was $180,000 after all expenses were paid. What is the net profitability in dollars? (Enter your answer in dollars not in millions.)


  Net profitability $   

Solutions

Expert Solution

Expenses = 0.067 x $3,700,000 = $247,900

Dividends = 0.013 x $3,700,000 = $48,100

Investment returns = $180,000

Netprofits = $3,700,000 - $1,970,000 - $247,900 - $48,100 + $180,000

= $1,614,000

Thanks


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