Question

The operating ratio for a PC insurer equals _________. A. loss ratio plus the ratios of loss adjustment expenses to premiums earned. B. loss ratio plus expense ratio plus dividend ratio. C. combined ratio minus dividends paid to policyholders. D. acquisition costs plus dividends paid as a proportion of premiums earned. E. combined ratio after dividends minus the investment yield.

Answer 1

Answer:

. E. combined ratio after dividends minus the investment yield

Explanation:

The operating ratio for a PC insurer

can be regarded as the comparison of total expenses of a company compared to net sales generated or the generated revenue. The operating ratio gives the measurement of a overall operational profitability of a firm from both underwriting as well as investment activities. It can be calculated by finding the ratio of

(property's operating expense after substraction of depreciation) and ( the gross operating income). It should be noted that The operating ratio for a PC insurer equals combined ratio after dividends minus the investment yield.