Float and investment income
Policyholders’ money, invested in the meantime.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: float and investment income.Updated 30 October 2026
What it does
The reason an insurer can earn a return with a combined ratio near 100%. Premium arrives before claims are paid, so the insurer holds its policyholders’ money in the meantime: the float, claims reserves plus unearned premium less premium still to be collected. Invested assets are the float plus the shareholders’ capital, rolled forward from net income, the growth in the float and dividends. The yield on them is investment income, and the slower the claims pay, the more of it there is.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 63–69: Investment yield, base case, Premium receivables, % of gross written premium, Shareholders’ equity, FY0A, Goodwill and intangible assets…
- Investments, rows 6–10: Net claims reserves, Unearned premium reserve, Less premium receivables, Float…
- Investments, rows 13–19: Opening invested assets, Plus net income, Plus growth in the float, Less dividends…
- Investments, rows 22–26: Investment yield, selected scenario, Investment base, Investment income, Of which earned on the float…
What a reviewer looks for
- Investment income on equity alone, missing the float that is most of the portfolio.
- Investment income on closing assets, which makes the model circular.
- A float that does not tie to the invested assets and the capital beside it.
Learn it, then build it
Vocabulary: Duration.