JKL Insurance Company reported the following information on its accounting statements last year:

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Premiums Written $90,000,000

Loss Adjustment Expenses $5,000,000

Underwriting Expenses $30,000,000

Premiums Earned $100,000,000

Incurred Losses $70,000,000

Investment Income $10,000,000

1.What was JKL's loss ratio last year?

2.What was JKL's expense ratio last year?

3.What was JKL's combined ratio last year?

4.What was JKL's investment income ratio?

5.What was JKL's overall operating ratio?

1. $90, 000, 000/ $100, 000, 000

= 0.9  

2. $5, 000, 000 + $30, 000, 000 / $10, 000, 000

= 3.5

3. = ($90, 000, 000 + $5, 000, 000 + $30, 000, 000) / $100, 000, 000

= 1.25

= $10, 000, 000 / $90, 000, 000

= 0.1111

5.. = ($5, 000, 000 + $30, 000, 000 + $90, 000, 000) / $100, 000, 000 + $10, 000, 000

= 1.136

Explanation:

1.Loss ratio is the losses an insurer incurs due to paid claims as a percentage of premiums earned. A loss ratio is the difference between an insurance company's premiums compared to how much it pays out in claims

This is the formula to calculate the loss ratio:

The ratio is calculated by dividing the amount of premiums by the amount of premiums collected.

A low ratio means the insurance company is profitable. A high ratio means the company is less profitable. If the ratio is 1 or 100%, that means that the company is unprofitable.

JKL’s loss ratio:

Premiums written: $90, 000, 000

Premiums earned: $100, 000, 000

$90, 000, 000/ $100, 000, 000 = 0.9  : 1

2.Expense ratio measures how much of a fund's assets are used for administrative and other operating expenses. An expense ratio is determined by dividing a fund's operating expenses by the average dollar value of it assets (the total market value of the investments that a person or entity manages on behalf of clients.

JKL’s Expenses Ratio:  

            =    Total Fund Expenses / Total Fund Assets

            =     $5, 000, 000 + $30, 000, 000 / $10, 000, 000

            =      3.5  : 1

3.Combined Ratio:  measures an insurer’s profitability. it is merely a combination of the loss ratio and expense ratio. It measures the losses and expenses incurred in relation to the premiums earned.

JKL’s Combined Ratio:  

= ($90, 000, 000 + $5, 000, 000 + $30, 000, 000) / $100, 000, 000

= 1.25  : 1

4.Investment Ratio: is the ratio that an insurer uses in order to measure the company’s net investments to its premiums earned. The ratio compares the income from investments to income from its other activities. This ratio is also a measure of profitability.

= $10, 000, 000 / $90, 000, 000

= 0.1111  : 1

5.Overall Operating Ratio: this is the ratio that a insurer to show his profitability realized before taxation, taking into account investment income.

= ($5, 000, 000 + $30, 000, 000 + $90, 000, 000) / $100, 000, 000 + $10, 000, 000

= 1.136  : 1

i believe it’s b because the rest don’t make sense

answer; dividing net income by 1- t ;