FIN 341 EXAM XIN CHE STUDY GUIDE
Loss ratio= - Answers -(Incurred losses + Loss adjustment expense) / Premiums
earned
Loss ratio* - Answers -a higher loss ration means worse underwriting performance
Expense ratio= - Answers -Underwriting expense/ Premiums written
Expense ratio* - Answers -a higher expense ratio means worse underwriting
performance
Combined ratio= - Answers -Loss ratio + Expense ratio
Combined ratio* - Answers -a higher loss combined ratio means worse overall
underwriting performance
Combined ratio>1 - Answers -underwriting loss
Combined ratio<1 - Answers -underwriting profit
ROI (Return on Investment)= - Answers -Net investment gain / Total invested assets
ROI* - Answers -a higher ROI means a better return on investment
Investment Income ratio= - Answers -Net investment income / Premiums earned
Investment Income ratio* - Answers -a higher investment income ratio means a better
investment income
ROA (Return on Assets)= - Answers -Net income / Total assets
ROA (Return on Assets)* - Answers -a higher ROA means a bette return on assets
Overall operating ratio= - Answers -Combined ratio - Investment income ratio
Overall operating ratio* - Answers -the lower the overall operating ratio the better
Overall operating ratio>1 - Answers -Loss
Overall operating ratio<1 - Answers -Profit
Homeowners 3 (HO-3: Special Form): - Answers -insures the dwelling and other
structures against all direct physical losses to property. Personal property is covered for
the same broad form perils listed for the HO-2 policy.
Loss ratio= - Answers -(Incurred losses + Loss adjustment expense) / Premiums
earned
Loss ratio* - Answers -a higher loss ration means worse underwriting performance
Expense ratio= - Answers -Underwriting expense/ Premiums written
Expense ratio* - Answers -a higher expense ratio means worse underwriting
performance
Combined ratio= - Answers -Loss ratio + Expense ratio
Combined ratio* - Answers -a higher loss combined ratio means worse overall
underwriting performance
Combined ratio>1 - Answers -underwriting loss
Combined ratio<1 - Answers -underwriting profit
ROI (Return on Investment)= - Answers -Net investment gain / Total invested assets
ROI* - Answers -a higher ROI means a better return on investment
Investment Income ratio= - Answers -Net investment income / Premiums earned
Investment Income ratio* - Answers -a higher investment income ratio means a better
investment income
ROA (Return on Assets)= - Answers -Net income / Total assets
ROA (Return on Assets)* - Answers -a higher ROA means a bette return on assets
Overall operating ratio= - Answers -Combined ratio - Investment income ratio
Overall operating ratio* - Answers -the lower the overall operating ratio the better
Overall operating ratio>1 - Answers -Loss
Overall operating ratio<1 - Answers -Profit
Homeowners 3 (HO-3: Special Form): - Answers -insures the dwelling and other
structures against all direct physical losses to property. Personal property is covered for
the same broad form perils listed for the HO-2 policy.
