The combined ratio is a key measure of an insurance company's profitability in its core underwriting operations. It is calculated as the sum of the loss ratio and the expense ratio.

• Loss Ratio = Claims / Premiums = 65 / 120 = 54.17%
• Expense Ratio = Operating expenses / Premiums = 20 / 120 = 16.67%
• Combined Ratio = Loss Ratio + Expense Ratio = 54.17% + 16.67% = 70.84%

Alternatively, it can be calculated as (Claims + Operating expenses) / Premiums = (65 + 20) / 120 = 85 / 120 = 0.7083, or 70.83%.

This is closest to 71%. Note that investment income is not included in the combined ratio (it is used to calculate the operating ratio instead).