Measuring an insurers performance includes measuring their profitability goals. Please read this section in detail in your textbook. The primary source of revenue for insurance companies(insurer) are insurance premium paid by insureds and investment income.

The revenue is offset by the amount of claims an insurance company has to pay. Losses(or claims) are the largest part of an insurers expenses, and is a very unique and a special challenge for insurance company as no other industry has this financial dynamic. So it is important that an insurance company selects the right risk to insure and also selects the right investment.

Information retrieved from Financial Statements ofABC Insurance Company(figures are in millions)

	2019	2020	2021
Earned Premiums	$ 428	$ 463	$ 550
Written Premiums	$ 438	$ 466	$ 609
Unearned premiums	$ 31	$ 33	$ 45
Losses Incurred	$ 248	$ 228	$ 250
Loss Adjustment Expenses	$ 203	$ 200	$ 214
Net Income	$ 20	$ 45	$ 113
Incurred Underwriting Expenses	$ 194	$ 171	$ 202
Net Investment Income	$ 126	$ 103	$ 82
Owners Equity	$ 690	$ 979	$ 1,015

**Investment income ratio (net investment income/earned premiums)

A. (5 points)

1. Using the information from the Financial Statement above, calculate the ratios for the below table.

2. Explain the trend of each ratio over the 3 years. Please provide a thoughtful analysis other than just its increasing/decreasing.

Ratio*	2019	2020	2021
Net Underwriting Gain/Loss
Expense Ratio
Combined Ratio

B. (5 points)

1. Using the information from the Financial Statement above, calculate the ratios for the below

table.

2. Explain the trend of each ratio over the 3 years. Please provide a thoughtful analysis other than just its increasing/decreasing.

Ratio*	2019	2020	2021
Investment Income Ratio
Overall Operating Ratio