Manulife Insurance Companys losses of a particular type per year are to a reasonable approximation normally distributed with a mean of $200 million and a standard deviation of $100 million. (Assume that the risks taken on by the insurance company are entirely non-systematic.) The one-year risk-free rate is 4% per annum with annual compounding. Estimate the cost of the following:

1. A contract that will pay in one years time 65% of the insurance companys costs on a pro rata basis

2. A contract that pays $150 million in one years time if losses exceed $300 million

I need an explanation for part 2.