Abstract

ABSTRACT: The DuPont system of equations has been used for many years when performing financial analysis on corporate financial statements. It has not been used, however, for analyzing property‐liability insurance company performance. This article shows that, with minor modifications, the DuPont system can be applied to the analysis of property‐liability insurance companies. It aids in understanding the relationship between underwriting operations and investment results and illuminates the role played by the interaction of assets, premiums, and surplus. The author hopes that the modified DuPont system presented in the article can become a standard for performing financial analysis of property‐liability insurance companies.

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