Combined Ratio
A measure of reinsurer profitability: claims + expenses divided by premiums. Below 100% means underwriting profit.
The combined ratio measures the profitability of underwriting operations. It equals the sum of the loss ratio (claims paid ÷ premiums earned) and the expense ratio (operating costs ÷ premiums), expressed as a percentage.
A combined ratio below 100% indicates an underwriting profit — the insurer or reinsurer paid out less in claims and expenses than it collected in premium. Above 100% indicates an underwriting loss, though investment income may offset this. A combined ratio of 95% means for every £100 in premium, £95 was paid out in losses and expenses.
Catastrophe years significantly impact reinsurance combined ratios. After the 2017 hurricane season (Harvey, Irma, Maria), several major reinsurers reported full-year combined ratios above 120%. Market pricing typically hardens in response.
Example usage
“Munich Re reported a combined ratio of 92.1% for property-casualty reinsurance in Q1 2026, with catastrophe losses of $850m.”
Frequently asked questions
What is Combined Ratio?
A measure of reinsurer profitability: claims + expenses divided by premiums. Below 100% means underwriting profit. The combined ratio measures the profitability of underwriting operations. It equals the sum of the loss ratio (claims paid ÷ premiums earned) and the expense ratio (operating costs ÷ premiums), expressed as a percentage.
How is Combined Ratio used in practice?
Munich Re reported a combined ratio of 92.1% for property-casualty reinsurance in Q1 2026, with catastrophe losses of $850m.
Related terms
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