# Combined Ratio

*Insurance — Finicade finance glossary*

The combined ratio adds the loss ratio and the expense ratio: below 100% is an underwriting profit, above 100% means the insurer relies on investments.

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`

**Also known as:** underwriting profitability, combined operating ratio

**Related terms:** [Loss Ratio](https://finicade.com/glossary/loss-ratio), [Insurance Float](https://finicade.com/glossary/insurance-float), [Insurance Premium](https://finicade.com/glossary/insurance-premium), [Reinsurance](https://finicade.com/glossary/reinsurance), [Financial Ratios](https://finicade.com/glossary/financial-ratios)

Source: https://finicade.com/glossary/combined-ratio