Measurements of Rates of Return For Casualty-Property Insurance Companies, [Review of Paper]

Doc discusses several traditional methods of measuring rates of return but primarily the return on assets. After discussing the various uses for return on assets he gives a concrete example by showing the inter-relationship among the various rates of return as well as the rate of premium growth and the ratio of surplus to premium. He uses this model to calculate the rates of return needed to maintain surplus growth equal to premium growth under various conditions. Doc's analysis should be helpful to those whoa re trying to forecast their company's premium, earnings and surplus. It is sobering to see the profit ratios needed to maintain adequate surplus in the face of the current inflationary growth of premium.