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A property insurer provided the following information: Determine the loss, expense and combined ratios.

A property insurer provided the following information: Determine the loss, expense and combined ratios.

Premiums written $55,000,000

Expenses incurred 9,000,000

Incurred losses & loss adjustment expenses 38,000,000

Earned Premiums 42,000,000

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Expert Solution

Answer : Calculation of Loss Ratio

Loss Ratio = Incurred losses & loss adjustment expenses / Earned Premiums

= 38,000,000 / 42,000,000

= 0.90476190476 or 0.90

Expense Ratio = Expenses incurred / Premiums written

= 9,000,000 / 55,000,000

= 0.16363636363 or 0.16

Combined Ratio = Loss Ratio + Expense Ratio

= 0.90363636363 + 0.16363636363

= 1.07

jeff jeffy answered 2 years ago
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