WC Results

Profitability

    Whereas combined ratios exclude the effect of investment income, return on net worth includes return on investment. Return on net worth therefore, is an important measure when looking at the success of a line of insurance since large sums of money are set aside for the payment of future losses (reserves). This is especially relevant for the workers compensation line.
    The return on net worth calculation helps to evaluate the profits earned in relation to the net worth that is committed to that market. The return is equal to profit after taxes divided by allocated capital and surplus adjusted to place it on a GAAP basis.

updated 02/28/08

Percent of Direct Premiums Earned
Return on Net Worth

Observations:
1. Indiana results have out performed the countrywide results for most years.
2. All industry return on net worth = 13.5% per Fortune Magazine, p. 36

Source: NAIC "Profitability by Line by State in 2006”, published January 2008

Disclaimers: NAIC recommends that readers be aware of caveats and limitations on the uses of these data and should read disclaimers in intro of report.