Question

In: Finance

A property–casualty insurer brings in $6.22 million in premiums on its homeowners MP line of insurance....

A property–casualty insurer brings in $6.22 million in premiums on its homeowners MP line of insurance. The line’s losses amount to $4,304,240, expenses are $1,567,440, and dividends are $136,840. The insurer earns $199,040 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%

Expert Solution

As per rules I am answering the first 4 subparts of the question

Loss ratio% = Losses/ Total insurance premium

= 4,304,240/ 6220000

=69.2%

Expense ratio% = Expenses/ Total insurance premium

= 1567440/ 6220000

=25.2%

Dividend ratio% = Dividend/ Total insurance premium

= 136840/ 6220000

=2.2%

Combined ratio%= Loss ratio + Expenses ratio + dividend ratio

= 69.2%+25.2%+ 2.2%

=96.6%

jeff jeffy answered 2 years ago

A property–casualty insurer brings in $7.5 million in premiums on its homeowners multiple line of insurance....

A property–casualty insurer brings in $7.5 million in premiums on its homeowners multiple line of insurance. The line’s losses amount to $4,862,700, expenses are $2,026,150, and dividends are $222,300. The insurer earns $249,650 in the investment of its premiums. Calculate the line’s: a) loss ratio b) expense ratio c) dividend ratio d) combined ratio e) investment ratio f) operating ratio g) overall profitability how profitable is the line

6. A property insurer provided the following information: Premiums written &

6. A property insurer provided the following information: Premiums written $55,000,000 Expenses incurred 9,000,000 Incurred losses & loss adjustment expenses 38,000,000 Earned Premiums 42,000,000 a. What is the loss ratio? (1 point) b. What is the expense ratio? (1 point) c. What is the combined ratio? (1 point) d. What does it mean for an insurer to have a combined ratio > 1? Why might this be acceptable to the insurer? (1 point)

3. An insurer ﬁnds that the time until occurrence of a claim from its property insurance...

3. An insurer ﬁnds that the time until occurrence of a claim from its property insurance division is exponentially distributed with a mean of 1 unit of time, and the time until occurrence of a claim from its life insurance division is exponentially distributed with a mean of 2 unites of time. Claims occur independently in the two divisions. Find the expected time until the ﬁrst claim occurrence, property of life.

A property and casualty insurance company categorizes its policyholders into three groups: low risk, medium risk,...

A property and casualty insurance company categorizes its policyholders into three groups: low risk, medium risk, or high risk. 25% of the policyholders are low risk and 30% are high risk. The high risk policyholders are three times as likely as medium risk policyholders to file an insurance claim and the medium risk policyholders are twice as likely as the low risk policyholders to file an insurance claim. Determine the proportion of the insurance claims filed by medium risk policyholders.

Define the profit function of the private insurer in the line of health insurance. That is,...

Define the profit function of the private insurer in the line of health insurance. That is, what are the revenues and costs of the insurance firm? Based on your definition, analyze the effects of the following exogenous changes on the insurer's profit: a.) an increase in insurance rate; b.) an increase in the insurer's share price in the stock market; c.) a general increase in health care expenditures; d.) an increase in population size; e.) an increase in the country's...

A common goal of insurance regulators is to ensure availability of property insurance to homeowners residing...

A common goal of insurance regulators is to ensure availability of property insurance to homeowners residing in urban areas. Concerned that insurers will offer property business only in upscale neighborhoods or urban areas, regulators in State A adopted a regulation requiring insurers to maintain a business presence throughout urban areas. State B adopted a regulation with the same goal as State A; however, State B’s regulation does not exempt any companies and includes a requirement that an executive from each...

Indicate the similarities and differences between property and casualty (PC) insurance companies and life insurance companies?

1.Over the course of several years, property and casualty insurance (e.g. homeowner's insurance, auto insurance) expects...

1.Over the course of several years, property and casualty insurance (e.g. homeowner's insurance, auto insurance) expects to encounter _________ claims from a customer, and health insurance expects to encounter ___________ claims from a customer. a.frequent; frequent b.frequent; infrequent c.infrequent; frequent d.infrequent; infrequent e.ulcer-oriented; more ulcer-oriented 2. In a Term Life Insurance policy, as an individual continues with the policy over a number of years with a fixed level of coverage a.the annual premiums will generally increase over time. b.the annual...

Identify the four characteristics or features of the perils insuredagainst by property-casualty insurance. Rank the...

Identify the four characteristics or features of the perils insured against by property-casualty insurance. Rank the features in terms of actuarial predictability and total loss potential.

Contrast the balance sheet of a property-casualty insurance company with the balance sheet of a commercial...

Contrast the balance sheet of a property-casualty insurance company with the balance sheet of a commercial bank. Explain the balance sheet differences in terms of the differences in the primary functions of the two organizations.