QUESTION 4 a) Metropolitan Company estimates that 500,000 structures that they insure will generate incurred property losses and loss adjustment expenses of P50million during 2022 .If the insurer's expense ratio is 35%, what is the gross premium for this property insurance? (5 marks) (b) BIHL Insurance incurred losses and loss adjustment expenses of 476,500 and earned premiums of P775, 000 for one line of coverage in 2019 . The expected loss ratio was 70%. According to the loss ratio method, by what percentage must the company adjust the premium for this line of coverage? Explain the direction of adjustment of the premium. (5marks) (c) Explain the principle of Subrogation and its purpose and essential characteristics. (5 marks) QUESTION 1 Thembisa is thinking of buying an P18, 000 whole life insurance policy. The annual premium for the coverage will be P250.00. The policy is active, and based on the insurer's previous experience with similar policies, the company is expected to pay P815 in dividends during the first twenty (20) years. If these dividends were invested at 8% interest each year for twenty (20) years, the dividends would total P1200. After 20 years, the cash value will be P4500.00. The appropriate annual interest rate for calculations involving the time value of money is 6%. REQUIRED: (a) What is the annual traditional net cost per thousand? (7 marks) (b) What is the annual surrender cost per thousand? (8 marks) QUESTION 2 You have been considering buying whole life policy for M50 000.00. Such type of coverage usually has an annual premium of M400.00. The coverage is participating, and based on the insurer's history with similar policies. It is expected that the insurer will pay M250.00 per year as dividends for the first twenty (20) years. The cash value for each of the 20 years will be M200.00. Both dividends and cash value have not been adjusted for time value of money. For calculations involving the time value of money, 5 percent is the appropriate interest rate. a) Complete the following Risk Matrix by filling in the frequency (L/H), severity (L/H) and treatment action. (5 marks) b) A sunflower farmer estimates, during March 2023, that he will harvest 60,000kgs of sunflower by December 2023. The price on futures contract for December 2023 Sunflower is P6.00 per kg. Sunflower futures contracts are traded in 5000kg units (i) Explain the risk that the farmer is exposed to. (5 marks) (ii) Determine the number of contracts that the farmer can hedge the risk he is exposed to at the time of harvest in time considering that the price of Sunflower can rise to P6.00 per kg and determine the total revenue after hedging has been done, (10 marks)