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Profit of a motor insurer in Saudi Arabia
The prompt
A motor insurer in Saudi Arabia earns premiums of SAR 1,000 million in a year. Claims are SAR 720 million, commissions SAR 100 million, and administration costs SAR 130 million. It holds on average SAR 1,500 million of investments for future claims and earns 4 percent on them. Calculate the loss, expense, and combined ratios and the profit before tax. Then say what happens if repair costs push claims up by 5 percentage points of premium.
Your interviewer will share data as you ask for it. Ask clarifying questions, state a hypothesis, then lay out your structure out loud before you calculate.
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