Underwriting profit

Underwriting profit

Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums.

It has also been very elusive to most insurance companies. Many companies will eschew Underwriting profit in order to gain a greater market share.

For example, an auto insurer collects money every month from its customers in the form of a premium. Should a customer have a covered auto accident, the company pays out a claim. In the time between the receipt of each premium payment and the paying of the claim, the money received by the insurer can be invested. Returns from investments are the primary source of profits for an insurance company. If the amount of premiums taken in is greater than the claims paid out, even before taking into account investment returns, the excess additional profit is called "underwriting profit".


Wikimedia Foundation. 2010.

Игры ⚽ Поможем решить контрольную работу

Look at other dictionaries:

  • Adjusted Underwriting Profit — The profit that an insurance company generates after paying out claims and expenses. Insurance companies earn revenue by underwriting new business (selling new insurance policies) and earning income on their financial investments. Subtracted from …   Investment dictionary

  • Underwriting — refers to the process that a large financial service provider (bank, insurer, investment house) uses to assess the eligibility of a customer to receive their products (equity capital, insurance, mortgage or credit). The name derives from the… …   Wikipedia

  • Underwriting Income — Profit generated by an insurer s underwriting activity over a period of time. Underwriting income is the difference between premiums collected on insurance policies by the insurer, and expenses incurred and claims paid out. Huge claims and… …   Investment dictionary

  • profit — prof·it n 1: gain in excess of expenditures: as a: the excess of the selling price of goods over their cost b: net income from a business, investment, or capital appreciation compare earnings, loss …   Law dictionary

  • Underwriting Group — A temporary association of investment bankers who wish to purchase a new issue of securities from an issuer in order to distribute the issue to investors at a profit. The underwriting group shares the risk and aid in the successful distribution… …   Investment dictionary

  • Underwriting spot — An underwriting spot is an announcement made on public broadcasting outlets, especially in the United States, in exchange for funding. These spots usually mention the name of the sponsor, and can resemble traditional advertising in commercial… …   Wikipedia

  • Underwriting Agreement — A contract between a group of investment bankers who form an underwriting group or syndicate, and the issuing corporation of a new securities issue. The underwriting agreement contains the details of the transaction, including the underwriting… …   Investment dictionary

  • Underwriting spread — The underwriting spread is the difference between the amount paid by the underwriting group in a new issue of securities and the price at which securities are offered for sale to the public. It is the underwriter s gross profit margin, usually… …   Wikipedia

  • Medical underwriting — is an insurance term referring to the use of medical or health status information in the evaluation of an applicant for coverage (typically for life or health insurance). As part of the underwriting process, health information may be used in… …   Wikipedia

  • Conference for Advanced Life Underwriting — CALU Founded 1991 Area served Canada Focus Advanced Life Underwriting Website …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”