What are the reinsurance contracts

Reference no: EM133731050

Assignment: Insurance Accounting- The Purpose & Importance of Reinsurance

I. Reinsurance is a form of insurance purchased by insurance companies in order to mitigate risk. Essentially, reinsurance can limit the amount of loss an insurer can potentially suffer. In other words, it protects insurance companies from financial ruin, thereby protecting the companies' customers from uncovered losses.

1. How do reinsurance companies work?
2. What are the Reinsurance Contracts?
3. Give example of reinsurances companies in KSA and describe their main services

II. What is the concept of "Fair Value? Outline the basic difference between fair value and book value of an asset. Explain the key features of fair value defined by FASB ASC.

III. XYZ Company has the following financial data:

Particulars	Amounts (SAR)
Total Profit for the Year	377,500
General Takaful Assets (Year 2014)	1,390,000
General Takaful Assets (Year 2015)	1,517,500
Cash	11,500
Short-term Investment	23,500
Short term liabilities	85,000
Underwriting Surplus Distributable to Participants/Participants' Share of Profit	145,500
Gross Contribution	958,000
Net Contribution	662,500
Wakalah Fee	77,500
Commission Paid	28,300
Management Expense	58,000
Net Claim Incurred	287,500
Earned Contribution	632,500

You are required to calculate:

1. Return on Assets
2. Quick Liquidity
3. Surplus Distribution Ratio
4. Expense Ratio
5. Claims Ratio

Reference no: EM133731050

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