Suppose Milan Liability Insurance has $400,000 retention limit for a single policy and five lines are ceded to Crown Re under surplus-share treaty agreement. (a) Is Milan Insurance allowed to issue a liability insurance application with the sum of insured of $3,000,000? (b) What is the underwriting capacity of Milan Insurance? (c) Assume Milan Insurance issued a policy with $1,500,000 coverage for one year. A few weeks later a $1,000,000 claim in reported by the policy holder. How much are the shares of Milan and Aman Re companies on this claim?
Suppose Milan Liability Insurance has $400,000 retention limit for a single policy and five lines are ceded to Crown Re under surplus-share treaty agreement. (a) Is Milan Insurance allowed to issue a liability insurance application with the sum of insured of $3,000,000? (b) What is the underwriting capacity of Milan Insurance? (c) Assume Milan Insurance issued a policy with $1,500,000 coverage for one year. A few weeks later a $1,000,000 claim in reported by the policy holder. How much are the shares of Milan and Aman Re companies on this claim?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Suppose Milan Liability Insurance has $400,000 retention limit for a single policy and five lines are ceded to Crown Re under surplus-share treaty agreement.
(a) Is Milan Insurance allowed to issue a liability insurance application with the sum of insured of $3,000,000?
(b) What is the underwriting capacity of Milan Insurance?
(c) Assume Milan Insurance issued a policy with $1,500,000 coverage for one year. A few weeks later a $1,000,000 claim in reported by the policy holder. How much are the shares of Milan and Aman Re companies on this claim?
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