What Does Combined Ratio After Policyholder Dividends Mean?
Combined ratio after policyholder dividends is a measure or gauge of the profitability of an insurer that reflects its financial standing relative to the volume of business it generates. The ratio, typically in percentage form, depicts the level of performance during a period. It is computed by dividing the total of the company's losses and expenses by the earned premiums.
Insuranceopedia Explains Combined Ratio After Policyholder Dividends
If the combined ratio after policyholder dividends is below 100% , it indicates that the company is already making some underwriting profit, while any ratio above 100% implies that the company is paying more money in claims than the premiums it receives. Nevertheless, it is still possible for a company with a ratio above 100% to still make an overall profit as the combined ratio does not reflect income from investments. Due to the latter, some also consider the combined ratio a good way to measure a company's performance.