CAS Exam 6C Fall 2016, Question 16
Study guide: Exam 6C
Part a (1.5 points)
For each of the following contracts explain whether there is a transfer of risk.
- i. Excess of loss treaty: $2M excess of $1M
- Aggregate limit: $2M
- Aggregate deductible: $1M
- Reinsurance premium: $1M
- ii. 50% quota share
- Ceding commission: 20%
- Expected loss ratio: 40%
- Reinsurer expenses: 5%
- iii. $300M excess of $50M earthquake reinsurance
- Reinsurance premium: $5M
- 100 years PML: $50M
- 200 years PML: $200M
- 500 years PML: $350M
Part b (0.75 points)
Identify three conditions that may limit the transfer of risk in a reinsurance contract.
Answer this question and see the worked solution