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Combined ratio

The combined ratio is a measure used for insurance companies that shows how well their operations are performing.

Expanded Definition

The combined ratio is calculated by adding the losses an insurer incurs with its expenses, then dividing that number by the total earned premiums. A combined ratio of less than 100% shows an insurer is making a profit on its operations and, hence, the lower the combined ratio the better.

It doesn't necessarily show the full results of an insurer because other factors like investment income aren't included.

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