here is the rest of the second point
Exercise 1 (20 pts) The insurance company ABC operates under the reinsurance treaty which obligatory cedes the maximum possible share of risk to the consortium of reinsurers. Prior to reinsurance programme the insurer ABC had a capacity to issue policies with the ceiling amount of 40 million. The reinsurance treaty combines hierarchically three types of cover: Quota Share at the bottom, then Surplus and the Excess of loss on the top. The Surplus secures retention left after Quota Share and the excess of Loss shields retention left after the Surplus. Below are details on each type of cover: 4. Quota Share 50% up to 50 million, 5. Surplus: Le lines of cover and the maximum retention Z3 million, 6.8 million XL over 4 million. The insurer ABC has underwritten a policy with the face value of 80 million and that policy resulted in a claim for 40 million (c) How much should ABC pay for this claim? (10 pts) (d) What is the maximum face value on policy which ABC is authorized to underwrite without Exercise 1 (20 pts) The insurance company ABC operates under the reinsurance treaty which obligatory cedes the maximum possible share of risk to the consortium of reinsurers. Prior to reinsurance programme the insurer ABC had a capacity to issue policies with the ceiling amount of 40 million. The reinsurance treaty combines hierarchically three types of cover: Quota Share at the bottom, then Surplus and the Excess of loss on the top. The Surplus secures retention left after Quota Share and the Excess of Loss shields retention left after the Surplus. Below are details on each type of cover: 4. Quota Share 50% up to 50 million, S. Surplus: 4 lines of cover and the maximum retention Z=3 million, 6.8 million XL over 4 million The insurer ABC has underwritten a policy with the face value of 80 million and that policy resulted in a claim for 40 million (c) How much should ABC pay for this claim? (10 pts) (d) What is the maximum face value on policy which ABC is authorized to underwrite without extending voluntary or obligatory reinsurance programme? (10 pts) Exercise 1 (20 pts) The insurance company ABC operates under the reinsurance treaty which obligatory cedes the maximum possible share of risk to the consortium of reinsurers. Prior to reinsurance programme the insurer ABC had a capacity to issue policies with the ceiling amount of 40 million. The reinsurance treaty combines hierarchically three types of cover: Quota Share at the bottom, then Surplus and the Excess of loss on the top. The Surplus secures retention left after Quota Share and the excess of Loss shields retention left after the Surplus. Below are details on each type of cover: 4. Quota Share 50% up to 50 million, 5. Surplus: Le lines of cover and the maximum retention Z3 million, 6.8 million XL over 4 million. The insurer ABC has underwritten a policy with the face value of 80 million and that policy resulted in a claim for 40 million (c) How much should ABC pay for this claim? (10 pts) (d) What is the maximum face value on policy which ABC is authorized to underwrite without Exercise 1 (20 pts) The insurance company ABC operates under the reinsurance treaty which obligatory cedes the maximum possible share of risk to the consortium of reinsurers. Prior to reinsurance programme the insurer ABC had a capacity to issue policies with the ceiling amount of 40 million. The reinsurance treaty combines hierarchically three types of cover: Quota Share at the bottom, then Surplus and the Excess of loss on the top. The Surplus secures retention left after Quota Share and the Excess of Loss shields retention left after the Surplus. Below are details on each type of cover: 4. Quota Share 50% up to 50 million, S. Surplus: 4 lines of cover and the maximum retention Z=3 million, 6.8 million XL over 4 million The insurer ABC has underwritten a policy with the face value of 80 million and that policy resulted in a claim for 40 million (c) How much should ABC pay for this claim? (10 pts) (d) What is the maximum face value on policy which ABC is authorized to underwrite without extending voluntary or obligatory reinsurance programme? (10 pts)