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Two situations describe how Atley Insurance Company has used reinsurance to meet its objectives. Situation 1 Atley Insurance Co. has developed a program for insuring office condominiums that has proven to be very popular with its producers. One producer in particular has been aggressive in selling this program and is attempting to write accounts that need high property coverage limits. Atley is concerned about the rapid growth of this program and the negative consequences if Atley is unable to accept large accounts. Atley and its reinsurers developed a reinsurance program that provides both large-line capacity and financing to aid future growth. The program consists of - a four-line surplus share reinsurance treaty ($75,0004=$300,000 limit) with Atley retaining $75,000. Two reinsurers participate in the program, each with two lines. - facultative reinsurance for accounts with coverage limits that exceed $375,000.. - a $1 million per occurrence limit. The exhibit illustrates how coverage limits, premiums, and losses will be shared on two of the accounts written under Atley's oftice program. Illustration of Situation 1 Account with Limits Within the Surplus Share Treaty The Doctor's Office account has a policy limits of $200,000. Coverage, premiums, and losses would be retained by Atley and shared with its reinsurers as shown below Illustration of Situation 1 Account with Limits Within the Surplus Share Treaty The Doctor's Office account has a policy limits of $200,000. Coverage, premiums, and losses would be retained by Atley and shared with its reinsurers as shown below Account with Limits That Execed the Sumlus Share Treaty The Chesterbrook Otfice Park Account has property coverage needs of $650,000. Because the coverage needs of this account exceed the limits of Atley's surplus share treat reinsurance program, Atley arranges facultative reinsurance that is also on a surplus share basis. Coverage, premiums, and losses would be retained by Atley and shared by its reinsurers as shown below. -This column actually totals 99.5. A primary insurer and its reinsurer would likely determine an exact percentage, but in this illustration we have not. Assume that Doctor's office and Chesterbrook Office Park both sustain substantial losses ( 50% ) catused by a tornado. Atley's reinsurance program would respond as shown below Atley is concemed that its existing reinsurance program will not adequately handle its growing catastrophe exposure. Atley amends its reinsurance program by adding a catastrophe excess of loss reinsurance agreement that provides $5 million in excess of $750,000. Atley arrange facultative limits up to $750,000 for most accounts. Atley writes the Technology Office Complex account for $4,000,000. The exhibit below shows how this amended reinsurance program would respond to a catastrophe that affects all three risks. Illustration of Situation 2 Account with Catastrophe excess agreement Had the tomado oceurred and damaged 50% of Technology Office Complex, Atley's reinsurance program would have responded as shown below. The catastrophe excess of loss reinsurance applies net after other available reinsurance. Two situations describe how Atley Insurance Company has used reinsurance to meet its objectives. Situation 1 Atley Insurance Co. has developed a program for insuring office condominiums that has proven to be very popular with its producers. One producer in particular has been aggressive in selling this program and is attempting to write accounts that need high property coverage limits. Atley is concerned about the rapid growth of this program and the negative consequences if Atley is unable to accept large accounts. Atley and its reinsurers developed a reinsurance program that provides both large-line capacity and financing to aid future growth. The program consists of - a four-line surplus share reinsurance treaty ($75,0004=$300,000 limit) with Atley retaining $75,000. Two reinsurers participate in the program, each with two lines. - facultative reinsurance for accounts with coverage limits that exceed $375,000.. - a $1 million per occurrence limit. The exhibit illustrates how coverage limits, premiums, and losses will be shared on two of the accounts written under Atley's oftice program. Illustration of Situation 1 Account with Limits Within the Surplus Share Treaty The Doctor's Office account has a policy limits of $200,000. Coverage, premiums, and losses would be retained by Atley and shared with its reinsurers as shown below Illustration of Situation 1 Account with Limits Within the Surplus Share Treaty The Doctor's Office account has a policy limits of $200,000. Coverage, premiums, and losses would be retained by Atley and shared with its reinsurers as shown below Account with Limits That Execed the Sumlus Share Treaty The Chesterbrook Otfice Park Account has property coverage needs of $650,000. Because the coverage needs of this account exceed the limits of Atley's surplus share treat reinsurance program, Atley arranges facultative reinsurance that is also on a surplus share basis. Coverage, premiums, and losses would be retained by Atley and shared by its reinsurers as shown below. -This column actually totals 99.5. A primary insurer and its reinsurer would likely determine an exact percentage, but in this illustration we have not. Assume that Doctor's office and Chesterbrook Office Park both sustain substantial losses ( 50% ) catused by a tornado. Atley's reinsurance program would respond as shown below Atley is concemed that its existing reinsurance program will not adequately handle its growing catastrophe exposure. Atley amends its reinsurance program by adding a catastrophe excess of loss reinsurance agreement that provides $5 million in excess of $750,000. Atley arrange facultative limits up to $750,000 for most accounts. Atley writes the Technology Office Complex account for $4,000,000. The exhibit below shows how this amended reinsurance program would respond to a catastrophe that affects all three risks. Illustration of Situation 2 Account with Catastrophe excess agreement Had the tomado oceurred and damaged 50% of Technology Office Complex, Atley's reinsurance program would have responded as shown below. The catastrophe excess of loss reinsurance applies net after other available reinsurance