A primary insurance company has a 100,000 retention limit. The company purchases a catastrophe reinsurance treaty, which provides the following coverage

The primary insurance company experiences a catastrophe loss of 450,000.

Calculate the total loss retained by the primary insurance company.

• 100,000
• 112,500
• 125,000
• 132,500
• 150,000

In Year 1 a risk has a Pareto distribution with [math]\alpha = 2[/math] and [math]\theta = 3000[/math] . In Year 2 losses inflate by 20%.

An insurance on the risk has a deductible of 600 in each year. [math]P_i[/math], the premium in year [math]i[/math], equals 1.2 times the expected claims.

The risk is reinsured with a deductible that stays the same in each year. [math]R_i[/math], the reinsurance premium in year [math]i[/math], equals 1.1 times the expected reinsured claims.

[math] \frac{R_1}{P_1} = 0.55 [/math]

Calculate [math]\frac{R_2}{P_2}[/math]

• 0.46
• 0.52
• 0.55
• 0.58
• 0.66

A primary liability insurer has a book of business with the following characteristics:

• All policies have a policy limit of 500,000
• The expected loss ratio is 60% on premiums of 4,000,000

A reinsurer provides an excess of loss treaty for the layer 300,000 in excess of 100,000. The following table of increased limits factors is available:

Calculate the reinsurer’s expected losses for this coverage (answer to the nearest 000s).

• 840,000
• 847,000
• 850,000
• 862,000
• 871,000