Question 7 (8 points) Traveler's Insurance Company enters into the following surplus-share treaty: Traveler's: retains $100,000 (1-line) for each homeowner's policy written American Re: first surplus that takes up to 3 lines of insurance General Re: second surplus that takes up to 2 lines of insurance Swiss Re: third surplus that takes up to 2 lines of insurance a) What is the capacity (maximum amount of insurance coverage) that Traveler's can write on a single policy? b) A homeowner's policy is written by Traveler's for $500,000 of coverage on a home in Nevada. A subsequent loss occurs for $240,000. How much will Traveler's, American Re, General Re, Swiss Re pay respectively? c) Following (b) above, suppose Traveler's Insurance switched the current treaty to an excess-of-loss treaty with all three reinsurers, with the retention limit remaining the same ($100,000). Under this scenario, how much will Traveler's, American Re, General Re, Swiss Re pay respectively? Question 7 (8 points) Traveler's Insurance Company enters into the following surplus-share treaty: Traveler's: retains $100,000 (1-line) for each homeowner's policy written American Re: first surplus that takes up to 3 lines of insurance General Re: second surplus that takes up to 2 lines of insurance Swiss Re: third surplus that takes up to 2 lines of insurance a) What is the capacity (maximum amount of insurance coverage) that Traveler's can write on a single policy? b) A homeowner's policy is written by Traveler's for $500,000 of coverage on a home in Nevada. A subsequent loss occurs for $240,000. How much will Traveler's, American Re, General Re, Swiss Re pay respectively? c) Following (b) above, suppose Traveler's Insurance switched the current treaty to an excess-of-loss treaty with all three reinsurers, with the retention limit remaining the same ($100,000). Under this scenario, how much will Traveler's, American Re, General Re, Swiss Re pay respectively