Skip to Content

combined ratio

A combined ratio is the sum of two ratios, one calculated by dividing incurred losses plus loss adjustment expense (LAE) by earned premiums (the calendar year loss ratio) and the other by dividing all other expenses by either written or earned premiums (i.e., trade basis or statutory basis expense ratio).

On This Page

Additional Information


When applied to a company's overall results, the combined ratio is also referred to as the composite or statutory ratio. Used in both insurance and reinsurance, a combined ratio below 100 percent is indicative of an underwriting profit.

Related Terms


Earned premium (EP) is that part of a policy's premium that applies to the expired portion of the...

The expense ratio is the percentage of premium used to pay all of the costs of acquiring, writing,...

The loss ratio is the proportionate relationship of incurred losses to earned premiums expressed as...

A written premium is the premium registered on the books of an insurer or a reinsurer at the time a...