• The gross leverage ratio is the sum of the insurance company’s net premium ratio, the net liability ratio and the reinsurance ceded ratio.

  • The gross leverage ratio is just one of several ratios used to analyze a company’s ability to meet its financial obligations.
  • The gross leverage ratio can be seen as a first approximation of an insurer’s exposure to pricing and valuation errors.
  • The net leverage ratio is generally lower than the gross leverage ratio and is usually more accurate.