What is the insurance “combined ratio”?

It’s the core P&C underwriting KPI. Combined Ratio = Loss Ratio + Expense Ratio (+ Dividend Ratio if paid). Results are expressed as a percentage of earned premium.

How do I calculate it from dollar amounts?

Use: Combined Ratio = (Incurred losses + LAE + Underwriting expenses + Policyholder dividends) ÷ Earned premium. Multiply by 100 to get a percent.

What do the pieces mean?

Loss Ratio uses incurred losses + loss adjustment expenses (LAE) divided by earned premium. Expense Ratio uses underwriting expenses (commission, G&A, acquisition) over earned premium. Dividend Ratio is policyholder dividends as a % of earned premium (some mutuals).

How do I interpret the number?

< 100% = underwriting profit (you kept part of each premium dollar after losses/expenses). > 100% = underwriting loss. The Underwriting Margin shown in results is 100% − Combined Ratio.

Why does the tool offer “Percent Ratios” and “Amounts ($)” input modes?

Use Percent Ratios when you already have loss/expense/dividend ratios. Use Amounts ($) when you have actual dollars for losses, LAE, expenses, dividends, and earned premium—the calculator converts them to ratios automatically.

Should I include policyholder dividends?

Include them only if your line or carrier pays dividends (e.g., some mutual insurers). If not applicable, leave Dividend Ratio at 0%.

What’s considered a “good” combined ratio?

Context matters by line and market cycle. Many carriers target mid-90s over the long run. Sub-90% is excellent; >100% signals underwriting loss (investment income may still rescue overall profitability, but underwriting is negative).

Net vs. gross—what should I use?

Be consistent. If you use net earned premium, also use net incurred losses/expenses/dividends (after reinsurance). Using gross? Keep all components gross. Mixing bases skews the result.

Calendar-year vs. accident-year?

Calendar-year ratios use incurred activity recorded in the year (including prior-year development). Accident-year focuses on losses from accidents occurring in the year. Both are valid—pick one approach and stick with it for trend comparisons.

Example using the calculator settings in the screenshot

Loss Ratio 65% + Expense Ratio 30% + Dividend 0% = Combined 95%, Underwriting Margin = 5% → “Profit, Thin Margin.”

Combined Ratio Calculator (Insurance Underwriting Profitability)

Combined Ratio Calculator

Compute an insurer's Combined Ratio from either Loss and Expense ratios (%) or from raw amounts (losses + LAE, underwriting expenses, optional policyholder dividends, and earned premiums).

Input Mode

Enter Loss Ratio (%) and Expense Ratio (%) directly. Optionally include Policyholder Dividends (as % of earned premium).

Loss Ratio

Expense Ratio

Include Policyholder Dividends

Policyholder Dividends (as % of earned premium)

Incurred Losses + LAE

Underwriting Expenses

Policyholder Dividends (optional)

Earned Premiums

Results

Loss Ratio %
Expense Ratio %
Dividend Ratio %
Combined Ratio %
Underwriting Margin (100% - Combined) %
Category

A sharp, straight-to-the-point tool to compute the Combined Ratio for insurers — the core underwriting KPI that blends loss ratio, expense ratio, and (optionally) policyholder dividends. See immediately if your book is generating underwriting profit (<100%) or underwriting loss (>100%), without spreadsheet gymnastics.

Introduction

The calculator accepts either percent ratios or raw amounts. In Percent mode, enter loss and expense ratios directly (and add dividends if applicable). In Amounts ($) mode, the tool converts line items to ratios against earned premium so you get a clean, apples-to-apples Combined Ratio. Built for underwriting teams, FP&A, and founders operating MGAs who need fast, defensible numbers.

Formulas

Percent Formula

Combined Ratio}=Loss Ratio + Expense Ratio + Dividend Ratio

Where:

Loss Ratio =
Expense Ratio =
Dividend Ratio = (optional)

Amounts Formula

Underwriting Margin

Underwriting Margin} = 100% – Combined Ratio

Example

Given:

Loss Ratio = 65%
Expense Ratio = 30%
Policyholder Dividends = 0%

Then:

Combined Ratio = 65 + 30 + 0 = 95%

Underwriting Margin = 100 – 95 = 5

Category: Profit, Thin Margin (95–100%)

How to Use the Combined Ratio Calculator

A quick workflow to compute Combined Ratio and underwriting margin correctly.

Choose your input mode
- Percent Ratios: Type Loss Ratio (%) and Expense Ratio (%). Toggle Include Policyholder Dividends if you pay them and enter the dividend % of earned premium.
- Amounts ($): Enter Incurred Losses, Underwriting Expenses, (optional) Policyholder Dividends, and Earned Premium. The tool converts to ratios automatically.
Review your results
- - Loss Ratio (%): = Incurred Losses ÷ Earned Premium × 100
- Expense Ratio (%): = Underwriting Expenses ÷ Earned Premium × 100
- Dividend Ratio (%): = Policyholder Dividends ÷ Earned Premium × 100 (if used)
- Combined Ratio (%): = Loss Ratio + Expense Ratio (+ Dividend Ratio)
- Underwriting Margin (%): = 100 − Combined Ratio
Interpret the output
- - < 100% → underwriting profit (premiums cover losses/expenses).
- ≈ 100% → near break-even; investment income likely drives total profit.
- > 100% → underwriting loss; revisit pricing, mix, leakage, and expenses.

Frequently Asked Questions

It’s the core P&C underwriting KPI. Combined Ratio = Loss Ratio + Expense Ratio (+ Dividend Ratio if paid). Results are expressed as a percentage of earned premium.
Use:
Combined Ratio = (Incurred losses + LAE + Underwriting expenses + Policyholder dividends) ÷ Earned premium.
Multiply by 100 to get a percent.
Loss Ratio uses incurred losses + loss adjustment expenses (LAE) divided by earned premium. Expense Ratio uses underwriting expenses (commission, G&A, acquisition) over earned premium. Dividend Ratio is policyholder dividends as a % of earned premium (some mutuals).
< 100% = underwriting profit (you kept part of each premium dollar after losses/expenses). > 100% = underwriting loss. The Underwriting Margin shown in results is 100% − Combined Ratio.
Use Percent Ratios when you already have loss/expense/dividend ratios. Use Amounts ($) when you have actual dollars for losses, LAE, expenses, dividends, and earned premium—the calculator converts them to ratios automatically.
Include them only if your line or carrier pays dividends (e.g., some mutual insurers). If not applicable, leave Dividend Ratio at 0%.
Context matters by line and market cycle. Many carriers target mid-90s over the long run. Sub-90% is excellent; >100% signals underwriting loss (investment income may still rescue overall profitability, but underwriting is negative).
Be consistent. If you use net earned premium, also use net incurred losses/expenses/dividends (after reinsurance). Using gross? Keep all components gross. Mixing bases skews the result.
Calendar-year ratios use incurred activity recorded in the year (including prior-year development). Accident-year focuses on losses from accidents occurring in the year. Both are valid—pick one approach and stick with it for trend comparisons.
Loss Ratio 65% + Expense Ratio 30% + Dividend 0% = Combined 95%, Underwriting Margin = 5% → “Profit, Thin Margin.”

Combined Ratio Calculator

Results

Introduction

Formulas

Percent Formula

Amounts Formula

Underwriting Margin

Example

How to Use the Combined Ratio Calculator

Choose your input mode

Review your results

Interpret the output

Frequently Asked Questions

Other Calculators in Corporate Finance & Analysis

Cost of Debt Calculator

Interest Rate Parity Calculator

Weighted Average Cost of Capital (WACC) Calculator

Cap Table Calculator

Operating Cycle (OC) Calculator

Net Operating Profit After Tax (NOPAT) Calculator