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Structure of the reinsurance arrange

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Reference no: EM133068668

-Suppose that Silly Insurance Company enters into an Excess of Loss reinsurance agreement with Big Dog Re to cover single loss occurrences over the next year. Big Dog Re agrees to pay all losses exceeding $5 million dollars up to a maximum for the occurrence of $10 million. How much does each company pay in the event of a $6.5 million loss?

-Silly = $6.5 million, Big Dog = $0
-Silly = $0, Big Dog = $6.5 million
-Silly = $5 million, Big Dog = $1.5 million
-Silly = $1.5 million, Big Dog= $5 million
-Silly = $3.25 million, BigDog Re = $3.25mill

-CONTINUED suppose instead that the loss from the occurrence is $11 million. How much does each company pay?

-Silly = $5 million, BigDog = $6 million
-Silly = $6 million, BigDog = $5 million
-Silly = $5.5 million, BigDog = $5.5 million
-Silly = $5 million, BigDog = $5 million
-Silly = $4 million, BigDog = $6 million
-Silly = $6 million, BigDog = $4 million

-Suppose instead that Silly Insurance and Big Dog Re enter into a surplus share treaty, with Silly having a retention limit of $250,000 (1 line). Assume that a total of 4 lines are ceded to Big Dog. If Silly Insurance issues a policy on a property for $1,000,000 which then suffers a $200,000 loss, how much does each company pay?

-Silly = $100,000; Big Dog = $100,000
-Silly = $40,000; Big Dog = $160,000
-Silly = $160,000; Big Dog = $40,000
-Silly = $150,000; Big Dog = $50,000
-Silly = $50,000; Big Dog = $150,000
-Silly = $200,000; Big Dog = $0

-Given the structure of the reinsurance arrange between Silly Insurance and Big Dog Re last slide, what is the largest policy Silly Insurance can issue without exhausting its reinsurance?

-$1,500,000
-$1,250,000
-$1,000,000
-$750,000
-$500,000
-$250,000
-$200,000

Reference no: EM133068668

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