easy · Principles of Finance cost-of-capital-structure
A property-casualty insurer has a Loss Ratio of 72% and an Expense Ratio of 26%.
What is the insurer's Combined Ratio, and what does it indicate about their underwriting profitability?
- 98%; the company is losing money on its insurance operations.
- 72%; the expense ratio is ignored in profitability analysis.
- 98%; the company is making an underwriting profit.
- 100%; the company is at a break-even point in underwriting.
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