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Answer: 93.0%
The operating ratio, also called **combined ratio after dividends adjusted for investment income**, is calculated as: \[ \text{Operating ratio} = \frac{\text{Losses} + \text{Expenses} + \text{Dividends} - \text{Investment income}}{\text{Revenue}} \] Substitute the values: \[ \frac{213 + 69 + 6 - 9}{300} = \frac{279}{300} = 0.93 = 93.0\% \] So the correct answer is **C. 93.0%**.
Author: Manit Arora
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Question 21.4.1. For its most recent fiscal year, Acehouse Property-Casualty (APC) reports revenue of $300.0 million. Losses due to payouts (aka, loss and loss adjustment expense) were $213.0 million. Expenses (aka, underwriting expenses) were $69.0 million. Dividends paid were $6.0 million. Investment income was $9.0 million. What was the Operating ratio; aka, Combined ratio after dividends (CRAD) adjusted for Investment Income?
A
7.0%
B
23.0%
C
93.0%
D
106.%
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