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<p> </p> <p> </p> <p>The insurance company have a qouta share & Surplus treaty , total capacity100,000,000.</p> <p>The question :-</p> <p>Attempt to trace the reinsurance placing for100% of the insured risk , bearing in mind the following :-</p> <p>1) Qouta share treaty capacity50% of100% , of which ceding company's retention25% .</p> <p>2) Surplus treaty capacity50% of100% .</p> <p> Wish you good luck.</p>
The quota-share &surplus reinsurance placing as follows :-
(A )Quota -share treaty reinsurer's share =50% of100% =50,000,000
(B) Ceding company's retention =25% of50% of100% =12,500,000
(C) Quota -share reinsurer's share =75% of50% of100% =37,500,000
(D) Surplus treaty reinsurer's share =50% of100% =50,000,000
Therefor the total treaty capacity fully utilized and placed (100% ) =100,000,000
But we have still surplus amount equal50,000,000 part of the total sum insured 150,000,000 how we cover it , the answer definitely is = THIS AMOUNT IS SURPLUS AND BEYOND THE AUTOMATIC TREATY CAPACITY , HENCE SHOULD BE FACULTATIVELY PLACEDTherefor facultative reinsurer's share =50,000,000
Kind regards