CAS Exam 6C Spring 2018, Question 16
Study guide: Exam 6C
The following information is projected for a property and casualty insurance company as at December 31, 2018. All amounts are in thousands of dollars ($000s).
- Gross Written Premiums: 1,500
- Gross Unearned Premiums: 500
- Gross Loss Reserve: 850
For 2018, this company is considering entering into a 50% quota share agreement with a reinsurer with a 15% ceding commission. If the company enters into this treaty, the surplus is expected to decrease from 654 to 495.
Part a (1 point)
Identify four key principles of risk transfer.
Part b (1.25 points)
Assess whether entering into this agreement is expected to provide surplus relief.
Part c (0.75 points)
Identify three principal functions of reinsurance other than providing surplus relief.
Answer this question and see the worked solution