[U028]

underwriting margin

A computation used predominantly by property and casualty insurers to determine the amount of underwriting loss or gain--based on 100% being the break-even point. Any time the total loss ratio and expense ratio versus the amount of premium written is less than 100%, it is indicative of an underwriting profit. If over 100%, it shows an underwriting loss. For example, an insurer with an expense ratio of 32% and a loss ratio of 66% or a total underwriting expense of 98% shows a 2% underwriting profit.

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