$1.$ The Better Insurance Company has the following financial statements. $20222023$

Net Premiums Written $48,61247,398$

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Income Statement $($$ mils.$)$

Premiums Earned $42,62448,321$

Loss Expenses $30,74634,364$

Operating Expenses $17,72017,693$

Total Policy Expenses $48,46652,057$

Net Underwriting Gain$/$Loss $(5,842)(3,736)$

Net Investment Income $15,70019,995$

Operating Income before taxes $9,85816,259$

Dividends to Policyholders $6,51710,361$

Income Tax $1,2941,670$

Net Income $$2,047$ $ $4,228$

Ave Investment Yield $4\mathrm{.}94\%5\mathrm{.}89\%$

$($mils$.)20222023$

Total Assets $$381,972$ $$406,529$

Liabilities

Total Liabilities $$349,069$ $$369,700$

Total Equity $32,90336,829$

Total Liabs. & Equity $$381,972$ $$406,529$

a$.$ Calculate and evaluate the Net Underwriting Margin $($NUM$)$; Loss Ratio

Expense Ratio; Combined Ratio; and Overall Profitability Ratio for each year

using the information in the income statement above. Also calculate the firm$$s OPM, OROA, ROA, ROE, and equity multiplier $($EM$).$

Recall NUM $=($Premiums Earned $$ Total Policy Expenses$)/$ Total Assets

NUM $2022\_\_\_\_\_\_\_\_\_\_$ NUM $2023\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

overall profitability ratio $=\{[100\%-$ Combined Ratio$\%]+($Investment Yield$\%\}$for the firm each year$)$

$20222023$

Expense ratio

expense ratio $=($operating expenses$/$net premiums written$)$

Loss ratio

loss ratio $=($loss expenses$/$premium earned$)$

Combined ratio

combined ratio $=($loss ratio $+$ expense ratio$)$

Average Investment Yield Ave $($given$)4\mathrm{.}94\%5\mathrm{.}89\%$

Overall Profitability $($OP$)$

OP $=\{[100\%-$ Combined Ratio$\%]+($Investment Yield$\%\}$

c$.$ Analyze the trends in all of the ratios, and the other financial information provided. What do they reveal for trends over time including trends as well on the firm$$s balance sheet? What areas of strength & weakness are revealed? What advice for improvement would you give?

$2.$ Find an article on how Artificial Intelligence $($AI$)$ is changing a sector in the financial institutions industry $($i$.$e$.$ banking, investment banking, asset management, the insurance industry, or another FI sector$).$ Briefly summarize the article in a paragraph or two.