Did Insurance Company \(K\) have more than $300 million in

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Official Guide

Did Insurance Company \(K\) have more than $300 million in total net profits last year?

1. Last year Company \(K\) paid out $0.95 in claims for every dollar of premiums collected.
2. Last year Company \(K\) earned a total of $150 million in profits from the investment of accumulated surplus premium from previous years.

OA E

[Brent@GMATPrepNow]

Official Guide

Did Insurance Company \(K\) have more than $300 million in total net profits last year?

1. Last year Company \(K\) paid out $0.95 in claims for every dollar of premiums collected.
2. Last year Company \(K\) earned a total of $150 million in profits from the investment of accumulated surplus premium from previous years.

OA E

Target question: Did Insurance Company \(K\) have more than $300 million in total net profits last year?
Jump straight to...
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Statements 1 and 2 combined
Statement 2 tells us about profits from ONE PART of Company K's business.
Statement 1 tells us a tiny bit about Company K's expenses.

There are several scenarios that satisfy BOTH statements. Here are two:
Case a: Company K earned a total of $150 million in profits from ONE PART of its business, and another $100 Billion in profits from the OTHER PARTS of its business. In this case, the answer to the target question is YES, Company K DID have more than $300 million in total net profits last year.
Case b: Company K earned a total of $150 million in profits from ONE PART of its business, and LOST $100 Billion in the OTHER PARTS of its business. In this case, the answer to the target question is NO, Company K did NOT have more than $300 million in total net profits last year.

Since we cannot answer the target question with certainty, the combined statements are NOT SUFFICIENT

Answer: E

Cheers,
Brent

[Scott@TargetTestPrep]

Official Guide

Did Insurance Company \(K\) have more than $300 million in total net profits last year?

1. Last year Company \(K\) paid out $0.95 in claims for every dollar of premiums collected.
2. Last year Company \(K\) earned a total of $150 million in profits from the investment of accumulated surplus premium from previous years.

OA E

Solution:

We need to determine whether Insurance Company K had more than $300 million in total net profits last year.

Statement One Alone:

Without knowing the total number of dollars of premiums Company K collected last year, we can’t determine whether Insurance Company K had more than $300 million in total net profits last year. Statement one alone is not sufficient.

Statement Two Alone:

This does not tell us anything about the profits earned on the premiums collected last year. Statement two alone is not sufficient.

Statements One and Two Together:

Even with the two statements, we still don’t know the total number of dollars of premiums Company K collected last year, and therefore, we can’t determine whether Insurance Company K had more than $300 million in total net profits last year. Both statements together are still not sufficient.

Answer: E