Warren is the president of The Huge Insurance Company. His Vice-President in charge of Finance comes to him one day and says "Warren, our combined ratio for the year is 105%." Warren replies, "Let's party!" Why isn't Warren upset about the high combined ratio?

Warren is the president of The Huge Insurance Company. His Vice-President in charge of Finance comes to him one day and says "Warren, our combined ratio for the year is 105%." Warren replies, "Let's party!" Why isn't Warren upset about the high combined ratio?



A) The company probably made enough money on its investments to make up for the underwriting losses.

B) The company has actually made a 5% profit on its insurance business.

C) The combined ratio really isn't that important... it only measures the combined productivity of all regional offices the company owns.

D) The combined ratio is not an important indicator of underwriting results.



Answer: A

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