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Ferrari Total Return Basic Equation
- T/S = (I/A)(1 + R/S) + (U/P)(P/S)
- Total return is driven by both investment return on assets and UW profitability relative to premium
Ferrari Role of Reserves as Source of Investable Capital
T/S = (I/A) + (R/S)(I/A + U/R)
3 specific examples of relationship btwn ratios in Ferrari
- Incr in P/S ratio will likely lead to lower investment return on assets
- P/S ratio will move in the same direction as UW profit
- UW profits and investment return on assets will move in the same direction
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