Exam DISC-RM Practice Question 16
Study guide: Exam DISC-RM
With illustrative figures, an insurer sets next year's rates for a line expecting losses of $120 million and expenses of $60 million on premium of $200 million. During the year, storms push incurred losses to $150 million; expenses come in as planned, and investment income on the line's funds is $16 million. Which statement is correct?
- A) The combined ratio is 90%, so the line made an underwriting profit.
- B) The combined ratio is 105%, an underwriting loss, but the line is profitable after investment income.
- C) The combined ratio is 105%, so the line lost money overall.
- D) The combined ratio is 113%, so the line lost money even after investment income.
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