Under the "trade method" the combined ratio is the sum of incurred losses, loss adjustment expenses, and underwriting expenses, then divided by premiums written. Under the "statutory method" the combined ratio has the same numerator, but the denominator is premiums earned. Which method will result in a lower combined ratio?

trade method

statutory method

neither, because it is always true that premiums earned $=$ premiums underwritten

the answer depends on whether incurred losses exceed earned premiums