Suppose you have a surplus share treaty with a line of 100k and 3 lines. This surplus share treaty inures to the benefit of a 100k xs 25k XOL treaty.
To exposure rate a 500k property, would I assume the IV of the property is (a) 100k or (b) 300k (since the SS only removes 200k of exposure for the insurer)?
(a) would use exposure curve from 25/100 to 125/100, or
(b) would use exposure curve from 25/300 to 125/300.
If it is (b), then I feel like I am missing the fact that the last 200k are less likely to be realized since the cedent would not pay it until after the SS is used.
To exposure rate a 500k property, would I assume the IV of the property is (a) 100k or (b) 300k (since the SS only removes 200k of exposure for the insurer)?
(a) would use exposure curve from 25/100 to 125/100, or
(b) would use exposure curve from 25/300 to 125/300.
If it is (b), then I feel like I am missing the fact that the last 200k are less likely to be realized since the cedent would not pay it until after the SS is used.
Surplus Share inuring to benefit of XOL
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