# Calculate Insurance Expense Ratio

**Dividing underwriting expenses by net premiums earned gives the expense ratio.**

**Calculate insurance expense ratio**. The expense ratio is simply defined as the amount of costs per dollar of sales. Insurers may calculate the expense ratio using net. Under the trade basis combined ratio the insurance company is paying out less than the premiums it receives. Thus if a company has 9 in total costs for every 10 in total sales it has a 90 percent expense ratio.

What is an expense ratio. The lower the expense ratio the better the profitability of the insurer. An insurance company with a loss ratio of over 100 percent is losing money and must raise premiums or risk being unable to meet future liability payments. The combined ratio is calculated by adding the loss ratio and expense ratio.

A trade basis which is expense divided by written premium and on a statutory basis when the expense is divided by earned premium. This refers to the sum of the loss ratio and the expense ratio. If gross profit for the latest quarter was 100 000 and operating expenses were 40 000 you divide 40 000 by 100 000 to determine the ratio. The combined ratio essentially adds together the percentages calculated from the loss ratio and the expense ratio to show profitability.

Anthony is having an age of 23 years. In other words measures the percentage of your investment in the fund that goes to paying management fees by comparing the mutual fund management fees with your total assets in the fund. There are two methodologies to measure the expense ratio. A lower loss ratio means higher profits.

Operating expense ratio example to calculate a ratio for the most recent month or quarter simply pull the variables from your income statement. Underwriting expenses refer to the costs of obtaining new policies from insurance carriers. The expense ratio is an efficiency ratio that calculates management expenses as a percentage of total funds invested in a mutual fund. The expense ratio compares an insurance company s expenses incurred when underwriting a policy to the revenues it expects to receive from it.

To calculate the housing expense ratio simply take the sum of all property expenses and divide it by a pretax income. Expense ratio the percentage of premium used to pay all the costs of acquiring writing and servicing insurance and reinsurance.