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23 Cards in this Set
- Front
- Back
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Adjusted Liabilities to Liquid Assets Ratio
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= (Total liabilities - agents' balances deferred and not yet due) / Liquid Assets Ratio
An acceptable value for this ratio is less than 100 percent. If the ratio is over 100 percent, it could indicate that the insurer could face liquidity problems and an examiner would then focus attention on reserve adequacy, investment mix, and asset valuation; IRIS concept |
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Equity Multiplier Ratio
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Total Assets / Shareholders' equity
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Premium to surplus ratio
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Net written premiums / Policyholders' surplus
aka capacity ratio |
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Loss ratio
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Incurred losses + loss adjustment expenses / Earned premiums
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Investment income ratio
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Net investment income / Earned premiums
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Insurance leverage equation
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= Reserves / Policyholders' surplus
= (Premiums written / Policyholders' surplus) x (Reserves / Premium written) * Look it up! Doesn't make much sense to me right now |
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Liquidity ratio
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(Cash + Invested assets at market value)
/ (Unearned premium reserve + loss reserves + LAE reserves) Greater than or equal to 1 is desirable; measures the extent to which an insurer can meet its obligations as they come due |
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Cost of debt
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(Risk free rate of return + Risk premium) x (1 - tax rate)
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Gross profit
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Sales (or operating revenue) - Cost of goods sold
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Debt-to-assets ratio
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Liabilities / Assets
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Present value of a perpetuity
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(Payment per period) / (Discount rate)
* Look this up!!! |
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Net income
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Revenues
- Expenses (including depreciation) + Gains - Losses - Taxes |
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Payout ratio
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The proportion of a company's earnings or net income paid out as dividends to shareholders
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Inventory Turnover Ratio
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Cost of goods sold / Inventory
INdicates how quickly inventory is sold. A low ratio indicates inventory is not being sold quickly enough. |
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Return on assets
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Net income / Total assets
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Bond rate of return
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= (Total of the coupon payments + capital gain/loss) / Face value
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Net profit margin
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= Net income / Sales
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Investment Yield Ratio (non-IRIS)
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Net investment gain or loss / (Total cash + Invested assets)
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Investment Yield Ratio (IRIS)
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Net investment income earned for the year / (Average cash + invested assets for the year)
Acceptable value is 3.0 to 6.5 percent |
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Gross margin (e.g., Gross profit margin)
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Gross profit / Sales
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Acid-test ratio
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(Cash + marketable securities + accounts receivable) / Current liabilities
aka Quick Ratio |
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Operating income
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Gross profit - (Selling, General, & Administrative Expenses)
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Reserves to Surplus Ratio
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(Unearned premium reserve + Loss & LAE reserves) / Policyholders' surplus
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