Module 7 &8: Management Issues for Non-Depository Institutions

The Save You Insurance Company has the following financial statements. 2020 2019

Net Premiums Written 48,612 47,398

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Income Statement ($ mils.)

Premiums Earned 42,624 48,321

Loss Expenses 30,746 34,364

Operating Expenses 17,720 17,693

Total Policy Expenses 48,466 52,057

Net Underwriting Gain/Loss (5,842) (3,736)

Net Investment Income 15,700 19,995

Operating Income before taxes 9,858 16,259

Dividends to Policyholders 6,517 10,361

Income Tax 1,294 1,670

Net Income $2,047 $ 4,228

Ave Investment Yield 4.94% 5.89%

(mils.) 2020 2019

Total Assets $381,972 $406,529

Liabilities

Total Liabilities $349,069 $369,700

Total Equity 32,903 36,829

Total Liabs. & Equity $381,972 $406,529

Dupont Analysis:

Asset Turnover

Net Profit Margin

ROA

ROE

OROA

Equity Multiplier (EM)

Give an overview for why the insurance companies overall profitability changed in 2020 including trends in the expense ratio, loss ratio, and combined rate, and average investment yield. Also do a Dupont analysis explaining why the ROE and ROA for the insurance company changed in 2020 (based on the Operating Profit Margin, Asset Utilization, and the Equity Multiplier.