XTC Insurance Co. has a quota-share treaty covering all restaurants that it insures. XTC retains 30 percent of the fire risk associated with this line of business, and reinsures the rest of the exposure with the X Reinsurance Co. XXL Restaurants buys $2 million in fire insurance coverage from XTC to protect its three locations. XXL pays a premium of $2000.
How much of the $2000 premium is ceded to X?
How much of the $2000 premium is held by XTC?
XXL suffers a $50,000 fire loss at one of its locations. How much of the loss will be paid by X?
XXL suffers a $50,000 fire loss at one of its locations. How much of the loss will be paid by XTC?