2017 Spring 26b Examiner Report solution
I was able to get the same answer as the Sample 1. Could you help me understand the solution in sample 2?
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I was able to get the same answer as the Sample 1. Could you help me understand the solution in sample 2?
Comments
Please provide what you are having difficulty with in the solution.
Really, just the difference between the two Reinsurer reserve amounts before the commutation in the two solutions. Is it simply them giving credit for assuming the percent ceded to the reinsurer is 1-QS% = 75%?
Sample 2 is there to show a solution version where amounts ceded to reinsurer are 75% of total. This is because "25% quota share" is a vague term that can be interpreted either as "25% to reinsurer" or as "75% to reinsurer, and it should have been clarified.
However, there is an error in sample 2. The reinsurer paid is still stated as 25% of total.
Oh ok, that makes sense then if that is an error. I was confused. Thanks!
Sure, good luck.
Do you guys think you could put a footnote in the wiki for this that there is at least one error in sample 2? I was confused as well.