The table below shows parts of an arrangement for a non-proportional reinsurance contract. Based on the following information, answers the questions.

Policy	Original S.I	Loss
Client 1	$1,000,000	25%
Client 2	$1,000,000	20%
Client 3	$1,500,000	35%

1. What is the meaning of “$750,000 XS $250,000”? 

2. Will cedent be indemnified under a $750,000 XS $250,000 Working XS? Why? How much? (Use Table to show your calculations). 

Policy	Original S.I	Loss	Cedant $$	Reinsurer $$

3. Given the same example, will there be any differences in your answer if the treaty is specified as $750,000 XS $250,000 Cat XS and the losses are caused 
4. by an earthquake? Use table to show your calculations if there are differences in your answer. 

Policy	Original S.I	Loss	Cedant $$	Reinsurer $$

4. 
   
5. Assume there is only 1 loss due to the earthquake – an 80% loss suffered by Client 3. The contract is $750,000 XS $250,000 Cat XS. Will cedent be indemnified? How much? [2 marks]