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2. Pringle Insurer has a reinsurance contract with Seattle Reinsurer, and the contract states that Pringle retains 30 percent of premiums and losses. Seattle Re

2. Pringle Insurer has a reinsurance contract with Seattle Reinsurer, and the contract states that Pringle retains 30 percent of premiums and losses. Seattle Re pays 70 percent of losses and receives 70 percent of premiums minus the ceding commission.

a) If a $400,000 loss occurs, how much will Seattle Re pay?

b) Why does Seattle Re pay the ceding commission rather than Pringle?

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