The financial report for Hometown Insurer contains the following information: What is Hometown Insurer's expense ratio?

The financial report for Hometown Insurer contains the following information: 


Earned premiums $4,000,000
Written premiums $5,000,000
Net investment income $1,000,000
Incurred Losses $3,000,000
Incurred underwriting expense $2,000,000

What is Hometown Insurer's expense ratio?


A. 20%
B. 40%
C. 50%
D. 75%


Answer: B. Hometown Insurer's expense ratio is its incurred underwriting expenses ($2,000,000) divided by its written premiums ($5,000,000), or 40 percent.

Popular posts from this blog

In insurance,

Jim has been arrested for drunk driving. In order to be allowed out of jail before his court date, Jim will most likely need: