Pojišťovací metriky
Insurance Metrics · Combined Ratio · Loss Ratio · Solvency · Underwriting
Key indicators for evaluating insurance companies — underwriting profitability, quality of the insurance portfolio, and regulatory capital adequacy.
What it is
Insurance companies have a different business model than banks or industrial companies — they earn on premiums, managing "float," and investment returns. They are evaluated using specific metrics:
Combined Ratio: (Loss Ratio + Expense Ratio) × 100%
- →Below 100% = the insurer earns on underwriting (underwriting profit)
- →Above 100% = the insurer loses on underwriting — it must earn on investment returns
Loss Ratio: Claims paid / Premiums earned. Measures how much of the premium is returned to clients as claims settlements. Typically 55–75% for non-life insurance.
Expense Ratio: Operating costs / Premiums earned. Includes administration, commissions, marketing. Typically 25–35%.
Float (insurance float): Premiums collected from clients that the insurer holds until it must pay claims. Buffett's favorite concept — if float is "free" (combined ratio ≤ 100%), the insurer essentially gets an interest-free loan to invest.
Not to be confused with free float in stocks — the same English word but an entirely different concept: there it refers to the share of shares freely tradable on the exchange, here it refers to insurance reserves available for investment.
Solvency Ratio: Regulatory capital / Capital requirement (SCR — Solvency Capital Requirement). Under Solvency II must be above 100%; in practice insurers target 150–200%+.
Why track it
Combined ratio is the "P&L of underwriting" — it says whether the core business (insuring risks) is profitable or loss-making. An insurer can mask poor underwriting with high investment returns, but this is not sustainable long-term.
Reserve Development: Monitor whether the insurer repeatedly releases reserves (reserve releases) or strengthens them. Aggressive reserve releases boost short-term earnings — but signal under-provisioning of future liabilities.
Pricing Cycle: Insurance markets are cyclical — after a major catastrophe, premium rates rise (hard market), then gradually fall (soft market). The position in the cycle determines future combined ratio and profitability.
Real-world example
Allianz 2024 (non-life insurance):
- →Combined Ratio: 93% → underwriting profit 7%
- →Loss Ratio: 64%, Expense Ratio: 29%
- →Solvency II ratio: 208% — significantly above the minimum
Sector comparison:
- →Excellent insurer: combined ratio below 90%
- →Average: 95–100%
- →Problematic: persistently above 100% (loss-making on underwriting)
Watch out for
Combined ratio varies significantly by segment: catastrophe insurance (cat reinsurance) can have a volatile combined ratio above 120% in a year of a major catastrophe but be profitable on average. Never assess a single year in isolation — monitor the 5–10 year average.
Insurers with a large "float" (life insurers, reinsurers) can be profitable even with a combined ratio slightly above 100% if investment returns from float compensate. Always assess total economic profit, not just the underwriting result.