Since the publication of the Little Report, there has been extensive discussion in the Journal and elsewhere on the important issue of calculating the profitability of property and liability insurers. Most of the discussion has centered on defining appropriate risk and return measures in order to ascertain the industry's profitability relative to that of other major industries. While it is generally agreed that inter-industrial comparisons need to be set within a risk-return framework, emphasis on devising comparative measures has resulted in some miscalculation of insurance company rates of return. This communication attempts to resolve some of the issues raised when calculating the rates of return for nonlife insurers and to present an accurate measurement procedure. The paper will also point out defects in recently published articles, which arise in part from a failure to relate profit ratios to the compound interest assumptions which underlie their use. From an economic point of view, the most meaningful rate of return measure, rt, for a general insurance company over a typical year is given by: