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Combined Ratio Calculator

Calculate the combined ratio — loss & LAE ratio plus expense ratio — with statutory or GAAP basis, underwriting profit and operating ratio.

How the combined ratio calculator works

The combined ratio measures underwriting profitability: below 100% the insurer makes money on underwriting, above 100% it loses money before investment income.

Formula

Combined ratio = (Losses + LAE) ÷ Earned premium + Expenses ÷ Written (statutory) or Earned (GAAP) premium + Dividends ÷ Earned. Operating ratio = Combined − Investment income ÷ Earned.

How to use it

1. Enter earned and written premium.
2. Enter incurred losses, LAE and underwriting expenses.
3. Choose statutory or GAAP basis and add investment income.

Worked example

$30.5M losses + $5.2M LAE on $50M earned is 71.4%; $15.1M expenses on $52M written is 29.0% — a 100.4% combined ratio.

Frequently asked questions

Why use written premium for the expense ratio?

On a statutory basis, acquisition costs are incurred when the policy is written, so they are matched to written premium.

Can an insurer profit with a combined ratio over 100%?

Yes, if investment income covers the underwriting loss — that is what the operating ratio shows.

Guides

• The Combined Ratio Explained: Losses, Expenses and Underwriting Profit

Related calculators

• Loss Ratio Calculator — Calculate the insurance loss ratio (incurred losses ÷ earned premium), with or without LAE, against a target.
• Rate Change Indication Calculator — Calculate the indicated rate change with the loss ratio method, weighted for credibility.
• Indicated Rate Calculator — Calculate an actuarially indicated rate from pure premium, fixed expenses, variable expenses and profit (pure premium method).