What are ultimate losses?

Ultimate losses refer to the total amount of losses that an insurance company expects to pay when all claims related to a particular policy or accident are fully resolved. This concept is crucial in understanding an insurer's financial obligations and how they reserve funds to cover these anticipated payouts.

When considering the context of the question, the correct choice indicates that ultimate losses encompass the total losses paid once all claims associated with a specific event are finalized. This definition aligns with how actuaries and underwriters calculate reserves to ensure that sufficient funds are available to meet the company's expected liabilities.

In contrast, the other choices describe different concepts within the insurance framework. For example, the total of all estimated future losses refers more to expected losses that haven't yet been realized, while the initial amount of written premium pertains to the revenue generated from sold policies, not the losses incurred. Lastly, claims that are unearned and unreported do not accurately capture the full scope of losses that an insurer will ultimately face, as they exclude finalized claims. Understanding these distinctions helps clarify the financial management aspects of insurance operations.