Top 4 financial ratios when buying an insurer

Buying insurance is pretty straightforward as a customer. But for investors in their stock, insurers are among the most complex businesses you’ll find. Here are the four ratios to focus on before you buy. 1. Expense ratioInsurance is a highly cyclical industry. Natural disasters can wreak havoc on a company’s income statement, so you have to take any one year’s financial performance with a grain of salt.So how do you separate the well managed companies from the lemons? One figure to keep an eye on is the expense ratio. The expense ratio shows the percentage of the net earned premium (NEP)...

Buying insurance is pretty straightforward as a customer. But for investors in their stock, insurers are among the most complex businesses you’ll find. Here are the four ratios to focus on before you buy. 

Insurance is a highly cyclical industry. Natural disasters can wreak havoc on a company’s income statement, so you have to take any one year’s financial performance with a grain of salt.

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