JKL Insurance Company reported the following information on its accounting statements last year:
Premiums Written $90,000,000
Loss Adjustment Expenses $5,000,000
Underwriting Expenses 30,000,000
Premiums Earned $100,000,000
Incurred Losses $70,000,000
What was JKL's combined ratio last year?

Question

Quizplus · Accepted Answer

The combined ratio is calculated as (Incurred Losses + Loss Adjustment Expenses + Underwriting Expenses) / Premiums Earned. Here, it is ($70,000,000 + $5,000,000 + $30,000,000) / $100,000,000 = 105,000,000 / 100,000,000 = 1.083 or 108.3%.

JKL Insurance Company Reported the Following Information on Its Accounting