Part $3$: Module $7$ &$8$: Management Issues for Non$-$Depository Institutions $($See Chapter $11$: Insurance Company Performance Analysis$)$

The Safe Harbor Insurance Company has the following financial statements.

Part $3$: Module $7$ &$8$: Management Issues for Non$-$Depository Institutions $($See Chapter $11$: Insurance Company Performance Analysis$)$

The Safe Harbor Insurance Company has the following financial statements. $20222021$

Total Assets $($in mils.$)$ $$160,316$ $$156,043$

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Income Statement $($$ mils.$)$

Premiums Earned $46,91441,941$

Expenses:

Loss Expenses $34,43429,932$

Operating Expenses $8,1147,298$

Total Policy Expenses $42,54837,230$

Net Underwriting Gain$/$Loss $4,3664,711$

$+$Net Investment Income $3,3306,005$

Operating Income before taxes $7,69610,716$

Income Tax Expense $15392,143$

Net Income $$6,157$ $ $8,573$

Ave Investment Yield $3\mathrm{.}78\%6\mathrm{.}49\%$

$5$a$.$ Calculate and evaluate the Net Underwriting Margin $($NUM$)$; Loss Ratio

Expense Ratio; Combined Ratio; and Overall Profitability Ratio for each year

using the information in the income statement above.

Note: Combined Ratio$\%=$ Expense Ratio $\%+$ Loss Ratio$\%$

Overall Profitability $=\{100\%-$ Combined Ratio$\%]+$ Investment Yield

Recall NUM $=($Premiums Earned $$ Total Policy Expenses$)/$ Total Assets

NUM $2022\_\_\_\_\_\_\_\_\_\_$ NUM $2021\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

$20222021$

Expense ratio$\%$

Expense Ratio$\%=$ Operating Expense$/$Premiums Earned $($Put as a $\%)$

Loss ratio$\%$

Loss Ratio$\%=$ Loss Expenses$/$Premiums Earned $($Put as a $\%)$

Combined ratio$\%$

Combined Ratio$\%=$ Sum of Expense Ratio $\%+$ Loss Ratio $\%$

Average Investment Yield $\%$

Investment Yield $\%$ Given above for each year

Overall Profitability $=[100\%-$ Combined Ratio$\%]+$ Investment Yield$\%$

$5$b$.$ Give an overview for why the insurance company$$s overall profitability changed in $2023$ including trends in the expense ratio, loss ratio, and combined rate, and average investment yield.

$5$c$.$ What suggestions would you give to the company to improve in the future?