How much are the shares of venus and crown re companies

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Reference no: EM132730130

Question 1: Mark would like to determine how much life insurance to purchase using the human life value approach. He assumes his average annual earnings over the next 30 years will be $40,000. Of this amount, $10,000 is paid for federal tax, $12,000 for life insurance premium and $3,000 for self-maintenance. Mark will generate this income for 30 more years and he believes that 4 percent is the appropriate interest (discount) rate. The present value of one dollar payable for 30 years at a discount rate of 4 percent is $17.29. What is Mark's human life value?

Question 2: Suppose Venus Liability Insurance has $400,000 retention limit for a single policy and five lines are ceded to Crown Re under surplus-share treaty agreement.

(a) Is Venus Insurance allowed to issue a liability insurance application with the sum of insured of $3,000,000?

(b) What is the underwriting capacity of Venus Insurance?

(c) Assume Venus Insurance issued a policy with $1,500,000 coverage for one year. A few weeks later a $1,000,000 claim in reported by the policy holder. How much are the shares of Venus and Crown Re companies on this claim?

Reference no: EM132730130

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