•An insurer has arranged a five-line surplus treaty and a two-line 2nd surplus treaty. A risk with a sum insured of $1M is offered, of which the insurer wishes to retain only $150K for its own account. Reinsurer X takes 10% of the first surplus and 25% of the second surplus treaty. What sum insured is reinsurer X liable for?
($100 000)
Retention：$150,000
1st Layer：$150,000 × 5 = $750,000
2nd Layer：$1,000,000- $150,000 - 750,000 = $100,000
Reinsurer X：10% × $750,000 + 25% × $100,000 = $100,000