5. An insurance company has purchased a per risk Excess of Loss reinsurance policy. The insurance companys retention is $500,000. The insurance company has the following 10 claims:

Claim 1 = $1,000,000

Claim 2 = $200,000

Claim 3 = $500,000

Claim 4 = $600,000

Claims 5 to 10 are less than $100,000 each

(a) What is the gross loss to the insurance company, prior to reinsurance?

(b) What is the net loss to the insurance company, after reinsurance recoveries?