Exercise 13 Refer to exercise 12 and calculate the cedant's share in the claim of 50 million from the policy with the insured sum of 80 million Hint: Notice that in Surplus the proportion to share the claim is calculated ex ante, in relation to risk, not in relation to claim, which is unknown when policy is being issued. In the previous exercise a full damage happened and the distinction between potential risk and incurred loss was irrelevant. Here the partial damage happened and you have regard the claims sharing under the Surplus in relation to risk. Reinsurance programme Retention of risk claim Initially 80 50 After Quota Share 40% 48 30 Surplus Z=3; L=4 => 36+12 => retention 75% 36 22,5 After 3 XL 15 19,5 Exercise 13 Refer to exercise 12 and calculate the cedant's share in the claim of 50 million from the policy with the insured sum of 80 million Hint: Notice that in Surplus the proportion to share the claim is calculated ex ante, in relation to risk, not in relation to claim, which is unknown when policy is being issued. In the previous exercise a full damage happened and the distinction between potential risk and incurred loss was irrelevant. Here the partial damage happened and you have regard the claims sharing under the Surplus in relation to risk. Reinsurance programme Retention of risk claim Initially 80 50 After Quota Share 40% 48 30 Surplus Z=3; L=4 => 36+12 => retention 75% 36 22,5 After 3 XL 15 19,5