3 4 Property & Casualty Insurance Calculate the expected quarterly underwriting profit and combined ratio for the following policy using Statutory Acctg and GAAP Acctg. Annual policy effective April 1, 2017 Written Premium $40,000 Expected LRs 75% Commision expense ratio-15% (all paid in first quarter) Other exense ratio-15% 6 10 12 13 14 15 16 17 18 19 20 21 Income Statement - Statutory Basis Income Statement GAAP Basis 2201 93 201 4 201912018 Full Yr 201 93 2017 94 2017 912018Full Yr Earned Premium Expected Losses Commisslons Other expenses Total Expenses Underwriting Profit/(Loss) 23 24 25 26 27 28 29 30 31 32 ' ' #DIV/0! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/0! #DIV/0! #DIV/0! #DIV/0! -DIV/0! #DIV/0! #DIV/0! Loss Ratio. #DIV/0! #DIV/O! #DIV/0! , ' ' ' ' Expense Ratio Combined Ratio' ' ' What is the Unearned Premium at the end of each quarter? (same for STAT and GAAP) 6/30/1/0/1 12/31/13/31/18 Unearned Premium 34 Assuming no losses get paid during the policy period, what are the Loss reserves at the end of each quarter? (same for STAT and GAAP) 35 36 37 6/30/1930/1 12/31/13/31/18 Loss Reserve 3 4 Property & Casualty Insurance Calculate the expected quarterly underwriting profit and combined ratio for the following policy using Statutory Acctg and GAAP Acctg. Annual policy effective April 1, 2017 Written Premium $40,000 Expected LRs 75% Commision expense ratio-15% (all paid in first quarter) Other exense ratio-15% 6 10 12 13 14 15 16 17 18 19 20 21 Income Statement - Statutory Basis Income Statement GAAP Basis 2201 93 201 4 201912018 Full Yr 201 93 2017 94 2017 912018Full Yr Earned Premium Expected Losses Commisslons Other expenses Total Expenses Underwriting Profit/(Loss) 23 24 25 26 27 28 29 30 31 32 ' ' #DIV/0! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/0! #DIV/0! #DIV/0! #DIV/0! -DIV/0! #DIV/0! #DIV/0! Loss Ratio. #DIV/0! #DIV/O! #DIV/0! , ' ' ' ' Expense Ratio Combined Ratio' ' ' What is the Unearned Premium at the end of each quarter? (same for STAT and GAAP) 6/30/1/0/1 12/31/13/31/18 Unearned Premium 34 Assuming no losses get paid during the policy period, what are the Loss reserves at the end of each quarter? (same for STAT and GAAP) 35 36 37 6/30/1930/1 12/31/13/31/18 Loss Reserve