Combined Ratio
Also called: underwriting profitability, combined operating ratio
The combined ratio adds the loss ratio and the expense ratio: below 100% means the insurer made an underwriting profit, above 100% means it lost money on policies and depends on investment income. Many insurers run above 100% for years quite deliberately, because the float earns more than the underwriting loss costs — an approach Berkshire Hathaway turned into a defining advantage.
Formula
Combined ratio = (Claims + Expenses) ÷ Premiums earned