3. Continue with Problem 2, identify on your graph how the probability of insolvency for

the insurer described in question 4 changes if:

a). the insurer raises $100 million of new capital

b). the insurer cedes a proportion of its liabilities to a reinsurer and simultaneously

reinsurers a similar amount of business from another insurer with a similar, but

uncorrelated book of business. Describe your results in words