Adjusted Underwriting Profit
- The profit that an insurance company generates after paying out claims and expenses. Insurance companies earn revenue by underwriting new business (selling new insurance policies) and earning income on their financial investments. Subtracted from this revenue are expenses associated with running the business and any claims that are made by insurance policy holders. The remainder is the adjusted underwriting profit. This is a term specific to the insurance industry.
Also called Underwriting Gain.
The adjusted underwriting profit is a measure of success for an insurance company. It is important for an insurance company to successfully manage their financial investments so they can pay out on the insurance policies they've sold. If they practice prudent underwriting procedures and responsible asset-liability management (ALM), they should be able to generate a gain. If they underwrite policies they shouldn't or fail to match their investments (assets) to their future insurance policy liabilities, they will not be as profitable.
Investment dictionary. Academic. 2012.
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