Question 4 (25 marks). An insurer has the following portfolio of policies: Class Benefit Amount Number Covered Probability of a Claim 400 0.01 10 120 0.01 The insurer purchases reinsurance with a retention limit R (R > 1) per policy at a cost of 0.025 per unit of reinsurance coverage. (a) Write down the retained risk S and the cost of reinsurance C in terms of R. (b) With the normal approximation, determine R to minimize the probability that the sum of the retained claims and the cost of reinsurance exceeds 36.Question 4 (25 marks). An insurer has the following portfolio of policies: Class Benefit Amount Number Covered Probability of a Claim 400 0.01 10 120 0.01 The insurer purchases reinsurance with a retention limit R (R > 1) per policy at a cost of 0.025 per unit of reinsurance coverage. (a) Write down the retained risk S and the cost of reinsurance C in terms of R. (b) With the normal approximation, determine R to minimize the probability that the sum of the retained claims and the cost of reinsurance exceeds 36