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A primary insurer writes policies with $1 million per-loss policy limits and purchased the following reinsurance treaties: (i) Quota Share treaty: The insurer cedes 60%
A primary insurer writes policies with $1 million per-loss policy limits and purchased the following reinsurance treaties: (i) Quota Share treaty: The insurer cedes 60% of the first $500,000 per loss to the QS reinsurer. (ii) Excess of Loss treaty: The EL reinsurer covers two layers: 80% of $200,000 excess of $100,000, and 90% of $400,000 excess of $300,000 per loss. The Quota Share treaty inures to the benefit of the EL reinsurer. Besides, the QS reinsurer enters into an excess of loss retrocession: For each loss covered by the quota share reinsurer, $200,000 excess of $100,000 will be covered by another reinsurer (i.e., a retrocessionaire). Allocate each of the following losses among the primary insurer, QS Reinsurer, EL Reinsurer, and Retrocessionaire: (a) Loss A: $55,000 (b) Loss B: $400,000 (c) Loss C: $575,000 (d) Loss D: $640,000
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