Subject - Financial Risk Management

1. Durant Fire Insurance has a retention limit of BD 100,000 and ceded the remaining BD 200,000 to Cury Fire Insurance Company. Considering the reinsurance agreement entered by both insurance company, compute the following;

a. Total Underwriting Capacity as an effect ceding. (0.5 mark for the correct process + 0.5marks for the correct answer = 1 marks

b. Distribution of loss if the underwriting value of the loss is BD 250,000 and the actual incurred loss is BD 12,000. (2 mark for the correct process + 1marks for the correct answer = 3 marks