question archive FK Insurance Company reported the following information on its accounting statements last year (9 marks) Ratio Premium Written Loss Adjustment Expenses Underwriting Expenses Premiums Earned Incurred Losses 2014 $75,000,000 $5,500,000 $20,000,000 $125,000,000 $100,000,000 Loss ratio Expense ratio Combined ratio Overall ratio Industry figure 75% 25% 110% 95% 1
FK Insurance Company reported the following information on its accounting statements last year (9 marks) Ratio Premium Written Loss Adjustment Expenses Underwriting Expenses Premiums Earned Incurred Losses 2014 $75,000,000 $5,500,000 $20,000,000 $125,000,000 $100,000,000 Loss ratio Expense ratio Combined ratio Overall ratio Industry figure 75% 25% 110% 95% 1
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FK Insurance Company reported the following information on its accounting statements last year (9 marks) Ratio Premium Written Loss Adjustment Expenses Underwriting Expenses Premiums Earned Incurred Losses 2014 $75,000,000 $5,500,000 $20,000,000 $125,000,000 $100,000,000 Loss ratio Expense ratio Combined ratio Overall ratio Industry figure 75% 25% 110% 95% 1. Calculate the company's: a. Loss Ratio b. Expense Ratio c. Combined Ratio
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1.Loss Ratio = Incurred losses (including the loss adjustment expense)/Earned premium
= (100,000,000+5,500,000)/125,000,000 = 0.844
2.Expense Ratio = Underwriting expenses/Net written premium
= 20,000,000/75,000,000 = 0.267
3.Combined Ratio = Loss Ratio + Expense Ratio
Combined Ratio = Loss Ratio + Expense Ratio, i.e., 0.844 + 0.267 = 1.11
