What Does Policyholder Dividend Ratio Mean?
Policyholders dividend ratio is an expression of the dividends given to policyholders and the net income received by the insurance company out of its underwriting activities. This is expressed in percentage form. It is an indicator of an insurance company's financial standing.
Insuranceopedia Explains Policyholder Dividend Ratio
When insurance companies give dividends to its policyholders, it is much akin to companies giving a share of its profits to its stockholders. How much it gives away indicates how successful the insurance company has been throughout its fiscal year. The policyholder dividend ratio is often a criterion investors consider when evaluating an insurance company. When the ratio is less than impressive, it often means that the company is setting aside income for the likelihood of a financial problem in the future.