Final answer:
The combined ratio in the insurance industry reflects company profitability from underwriting, but does not include investment income, which can make a company profitable despite a high combined ratio.
Step-by-step explanation:
A high combined ratio does not necessarily mean that an insurance company is unprofitable. The combined ratio is a measure used in the insurance industry to assess the profitability of an insurance company's operations and does not include investment income. This is significant because insurance companies not only receive income from premiums, but they also generate income from investing the funds that were received but not paid out in insurance claims. These investments are typically safe and liquid, to ensure that funds can be accessed when needed. Therefore, even with a high combined ratio, the investment income can offset underwriting losses, potentially leading to overall profitability.