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A Primer on Non-Life Insurance Ratios

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A Primer on Non-Life Insurance Ratios Craig Thorburn Cthorburn_at_worldbank.org A Primer on Non-Life Insurance Ratios Profit Basic Definitions Gross Written Premium Less ... – PowerPoint PPT presentation

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Date added: 12 July 2019
Slides: 14
Provided by: CraigTh9
Learn more at: http://www.cair.org.tt
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Tags: insurance | life | non | primer | ratios

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Title: A Primer on Non-Life Insurance Ratios


1
A Primer on Non-Life Insurance Ratios
  • Craig Thorburn
  • Cthorburn_at_worldbank.org

2
A Primer on Non-Life Insurance RatiosProfit
3
Basic Definitions
  • Gross Written Premium
  • Less Reinsurance Expense
  • Reinsurance premiums
  • Less reinsurance commissions received
  • Net Written Premium
  • Plus Unearned Premium Brought Forward
  • Gross Unearned Premium
  • Less Unearned Premium on Reinsurance Ceded
  • Less Unearned Premium Carried Forward
  • Gives Net Earned Premium

4
Basic Definitions (continued)
  • Claims Paid
  • Gross Claims Paid
  • Less reinsurance recoveries
  • Plus Claims Provisions Carried Forward
  • Less Claims Provisions Brought Forward
  • Gives Incurred Claims

5
Basic Definitions (continued)
  • Earned Premium
  • Less Incurred Claims
  • Less Underwriting Expenses
  • Gives Underwriting Result
  • Plus Investment Income
  • Gives Profit before Tax

6
Claims Ratio
  • First fundamental measure
  • Calculate, usually, by class of business as well
    as total business

7
Expense Ratio
  • Often, a large part of the expenses are
    associated with writing and renewing business,
    hence use Written Premium instead of Earned
    Premium.

8
Combined Ratio
  • Result used to be compared to 100

9
Investment Income
  • This ratio was developed to build to the total
    profit measure

10
Operating Ratio
  • Adjusting the combined ratio to get a measure of
    profitability against a 100 figure.

11
Profit Ratio Underwriting Ratio
  • Akin to a sales margin.
  • Underwriting Ratio draws focus on Underwriting
    performance separate from investment performance

12
Quality of the Investment Result
13
A Primer on Non-Life Insurance RatiosThird
Break
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