Reference no: EM133021785

1. Explain why insurance companies want smooth profits.

2.Explain why using quota-share reinsurance may reduce the volatility of profits for an insurance company that sells domestic property insurance.

3.Explain why using risk excess of loss reinsurance may reduce the volatility of profits for an insurance company that sells liability insurance.

4.Explain the balance that must be struck in the monitoring stage of the actuarial control cycle.

5.A fellow student has said to you: "The recent oil price volatility has been caused by derivatives. If all derivatives were banned, then the price would be less volatile, and this will reduce risk for users of oil."

Comment on this statement.

6.Explain the reasoning behind the Actuarial Profession issuing Guidance Notes.

7.A developing country has a rapidly expanding insurance industry. As all the insurance companies are relatively small, they use reinsurance extensively. The regulators are concerned that 80% of the reinsurance market is dominated by one very large reinsurance company.

1. i) Explain the possible concerns of the regulators.
2. ii) Explain how the regulators can reduce these concerns, giving the
3. advantages and disadvantages of the possible actions that can be taken.