CAS Exam 6C Spring 2014, Question 30
Study guide: Exam 6C
An analysis of the net present value of underwriting loss for a reinsurance contract indicates the following:
- There is a 5% chance that the contract will generate an underwriting loss for the reinsurer.
- In all of the underwriting loss scenarios, the average underwriting loss to reinsurance premium ratio is 25%.
Based on this information, provide one argument which indicates the presence of risk transfer and one argument which indicates the absence of risk transfer.
Part a (1 point)
Answer this question and see the worked solution