Instruction: Please answer the following questions. Show the computation.

Prudential Insurance is a property insurer that transacted a surplus-share reinsurance treaty with Lovelysafe Re. Prudential has a retention limit of P200,000 on any single building, and up to nine lines of insurance may beceded to Lovelysafe Re. A building valued at P1,600,000 is insured with Prudential. Shortly after the policy was issued, a severe storm caused an P800,000 loss to the building.

a. How much of the loss will Prudential pay?

b. How much of the loss will Lovelysafe Re pay?

c. What is the maximum amount of insurance that Prudential can write on a single building under the reinsurance agreement? Explain your answer.