Losses + “Loss adjustment expense” are your costs. Loss adjustment expense is broken into Allocated Loss Adjustment expense - expenses tied to a particular claim (Typically lawyers); Unallocated Loss Adjustment Expense - overhead.

Theoretically two companies with the same policies will pay out the same losses but will differentiate themselves in expense ratios.

In some lines it’s not bad to have loss + expense ratios > 100% because the average time of premium is very far from the average date of loss, so while there is an underwriting loss it is offset by the investment gain.