A ratio that monitors an insurer’s overall trading performance. It has three components: (a) the loss ratio, i.e. total losses and claims handling costs as a percentage of net premium income; (b) the expense ratio, i.e. underwriting expenses as a percentage of premium income; (c) investment income ratio, i.e. net investment income on funds contributed by policyholders as a percentage of net premium earned. The operating ratio is the result of deducting the investment income ratio from the sum of the loss ratio and expense ratio.
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The sum of the combined ratio plus investment income.