1. Suppose the loss ratio on a line of property insurance is 76 percent, the expense is 25 percent, the dividend ratio is 2 percent, and the investment yield is 7 percent. How profitable is this line?
2. An insurance company’s projected loss ratio is 80 percent, its loss adjustment expense ratio is 18 percent, and the dividend ratio is 3 percent. What is the minimum investment yield the company requires to earn a 4% profit?