A financial analyst determines that the combined ratio for the DEF Insurance Company was 112 percent for the prior year. Which one of the following statements best describes how the analyst can interpret this information for the year?

A financial analyst determines that the combined ratio for the DEF Insurance Company was 112 percent for the prior year. Which one of the following statements best describes how the analyst can interpret this information for the year? 



A. The insurer's net profit had to be negative.
B. The insurer had a loss ratio that was over 100 percent.
C. The insurer had an underwriting loss.
D. The insurer's expense ratio exceeded its loss ratio.


Answer: C. A combined ratio over 100 percent indicates that the insurer had an underwriting loss.

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