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Old 03-21-2012, 01:43 PM
Teleporter9699 Teleporter9699 is offline
Join Date: Mar 2012
College: Post Graduate (Insurance & Marketing)
Posts: 3
Default Actuarial Exam-Reinsurance question...solution needed!

Heyy friends,
I had got this question on reinsurance in the actuarial exam.
Although Im quite clear about the concept, I had to skip this question.
After discussion with my colleagues, its my understanding that it is related to reinsurance, retrocession, quota share/surplus treaties, excess of loss treaty, GNPI (Please correct me if im wrong)
Im at my wits end.....Needed a systematic approach to this problem.
Any help / solutions would be highly appreciated.

Thanks & warm regards,

Trident Insurance Co. approaches you as their broker for arranging reinsurance protection for their fire class of business for the year 1st April 2012 to 31st March 2013. Trident Insurance is in the direct insurance business since past two years.

Their Net Retention per risk is Rs. 10,00,000

They are now looking to purchase a proportional reinsurance treaty capacity of Rs. 50,00,000 either on a quota share basis or on a surplus basis. Estimated Premium Income(EPI) to the proposed treaty for 2012/13: Rs. 8,00,000.

As their broker advice them on the best treaty option and also prepare a slip accordingly for placement of the treaty. Besides the figures given above you may assume other percentages & figures wherever necessary when preparing the placing slip.

Trident Insurance Co., also wishes to protect their above net retention of Rs. 10,00,000 by a suitable non –proportional (i.e excess of loss) treaty. Please advice Trident Insurance a suitable excess of loss treaty structure and also prepare a slip for placement of the non-proportional treaty based on your advice given to Trident Insurance. You may assume figures wherever required.
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reinsurance, retrocession, slip, treaty

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