2017 - Spring Q 13
For Part A,
Comapny B's share is 1225 , and the direct losses incurred is (350 + 1175 = 1525), so shouldn't company B's ceded amount be 1525 -1225 = 300 ?
Why is it 0 in the examiner's report ?
It looks like you're new here. If you want to get involved, click one of these buttons!
For Part A,
Comapny B's share is 1225 , and the direct losses incurred is (350 + 1175 = 1525), so shouldn't company B's ceded amount be 1525 -1225 = 300 ?
Why is it 0 in the examiner's report ?
Comments
Company B's ceded amount is $0 because intercompany pooling arrangements function differently from traditional reinsurance. In this setup, both companies directly assume their share of the pooled losses without additional ceding transactions between them.
The examiner's report indicates that both Company A and Company B have a ceded total of $0. This reflects that, within the pool's operation, both companies are considered to have directly assumed their portion of the total pooled losses according to their percentages, rather than ceding (or transferring) losses between each other.