Losses in year 1 equal [math]X[/math] and have an exponential distribution with mean 1,000. Losses in year 2 equal [math]Y[/math] and, conditional on [math]X[/math], have an exponential distribution with mean [math]X[/math]. Determine the expected value of the maximum annual loss observed in the first two years of coverage.

• 735.76
• 1,103.64
• 1,367.88
• 1,500
• 2,103.64