FIN 341 EXAM XIN CHE STUDY GUIDE

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.