2001 q72 (Notes)
July 25th, 2011
This is another exam question that I’m receiving several emails about.
Since InsFleet is initially ceding 100% of the business, and then reassuming a percentage, there is an alternate (and probably better) way to answer this question: the numbers in Part 1 (assumed losses) could be calculated without subtracting the direct losses (so we are basically assuming that 100% of the losses that Infleet retains are assumed losses; which is exactly what the question mentioned).
Therefore, there are 3 components to the assumed losses:
AY 99 @ 12/31/99 = 9K
AY 99 development = 2K
AY 00 = 40K
Total = 51K