Let's take a look at a typical insurance income statement. Now, I think it can be helpful to remember that an insurance company is just like any other company in terms of having revenues and costs. It's just that the names, the line items are a little bit different to what we're used to. So let's start off with the revenues. We have premiums and also the investment returns from the investing activities. Now, as for any other company, after this point we would have the cost of sales. Well, the insurance equivalent of this is simply the claims expense. And now that we have both the premiums and the claims expense on the face of the income statement we can use that to calculate the underwriting profits for a P and C business. For life insurance, this tends to be referred to as the technical margin. Clearly, the insurance company will have other costs of running their business and there are two key types of costs here. Acquisition costs and administrative costs. The acquisition costs relate to the costs incurred in selling new insurance policies, and primarily this includes commissions paid to insurance brokers. These costs can actually be quite a significant one for an insurance company. The administrative costs relate to all the other costs of running the business such as staff salaries and head office costs. At this point, many analysts would sum all the line items from premiums down to administrative costs, and the net of all these line items will be referred to as the operating profit. This is because it reflects all the revenues and costs of the insurance activities before things like financing costs and tax payments. After operating profit, as for any other kind of business, is the finance costs and that's the interest cost resulting from any debt borrowings that the company has. Insurance companies typically have some subordinated debt and the interest costs on this will therefore be included here. From here on in the income statement is just like any other with pre-tax profits, tax expense, and net income.