Spring 2017 #13
I'm a bit confused on how "ceded" is defined here. I understand in part a ii. that the ceded is zero, as there is no outside reinsurance, and within the Schedule P intercompany pooling would not be considered ceded. (is that correct?)
I don't understand at all how the ceded is defined in part b. I'm assuming that because this is not schedule P, intercompany pooling is considered a ceded loss, and the loss and premium ceded to the pool are the ceded amounts. For company B, is 1000 ceded because the non-lead cedes all premium to the pool? Why for Company A is 20% of the total ceded and not 80%? And why in the examiner's report is company A ceding to company B?
Comments
These are explained in a schematic in the Practice Problem in the Intercompany Pooling section of the P wiki.
1) Within the Schedule P, intercompany pooling would not be considered ceded.
2) For company B, is 1000 ceded, because the non-lead cedes all premium to the lead.
3) Company A cedes back 20% of the total to B: that is how the pooling distribution interpreted.
So again, outside of P, pooling works like this:
To Clarify, The Sch P intercompany pooling, Premium or Losses ALWAYS has 0% ceded, Direct ALWAYS = Net, and Direct ALWAYS = % of total losses or premiums * pool %, correct?
Direct&Assumed = Total D&A * pool %. Sch P does not give Direct alone.
There may well be ceded that is pooled. It is the external cession, rather than cession to pool companies.