Complete the product profitability report through the administrative activities.

Question

Complete the product profitability report through the administrative activities. Determine the income from operations as a percent of premium revenue, rounded to the nearest whole percent. Enter all amounts as positive numbers.

Safety First Insurance Company

Product Profitability Report

For the Year Ended December 31, 2015

Auto

Workers' Comp.

Homeowners

Premium revenue

$  

$  

$  

Less estimated claims

  

  

  

Underwriting income

$  

$  

$  

Administrative activities:

New policy processing

$  

$  

$  

Cancellation processing

  

  

  

Claim audits

  

  

  

Claim disbursements processing

  

  

  

Premium collection processing

  

  

  

Total administrative expenses

$  

$  

$  

Income from operations

$  

$  

$  

Income from operations as a percent of premium revenue

  %

  %

  %

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Complete the product profitability report through the administrative activities. Determine the income from operations as a percent of premium revenue, rounded to the nearest whole percent. Enter all amounts as positive numbers.

Safety First Insurance Company

Product Profitability Report

For the Year Ended December 31, 2015

Auto

Workers' Comp.

Homeowners

Premium revenue

$  

$  

$  

Less estimated claims

  

  

  

Underwriting income

$  

$  

$  

Administrative activities:

New policy processing

$  

$  

$  

Cancellation processing

  

  

  

Claim audits

  

  

  

Claim disbursements processing

  

  

  

Premium collection processing

  

  

  

Total administrative expenses

$  

$  

$  

Income from operations

$  

$  

$  

Income from operations as a percent of premium revenue

  %

  %

  %

Explanation / Answer

Product Profitability Report

Auto Workers' Comp Home Owners Premium revenue 5750000 6240000 8160000 Less estimated claims 4312500 4680000 6120000 Underwriting income 1437500 1560000 2040000 Administrative activities: New policy processing 158400 180000 489600 Cancellation processing 84000 42000 378000 Claim audits 123200 38400 307200 Claim disbursements processing 49920 22464 87360 Premium collection processing 201600 43200 360000 Total administrative expenses 617120 326064 1622160 Income from operations 820380 1233936 417840 Income from operations as a percent of premium revenue 14.27% 19.77% 5.12%

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