Question

What are the two benefits derived from a reciprocal exchange of treaties?

a.

Increased stability in underwriting surplus and wider spread for net retained portfolio

b.

Increased profitability and improved balance in underwriting surplus

c.

Higher treaty capacity and greater stability in net premiums

d.

Balanced exchange of profit and improved spread for the insurer's portfolio

Posted under IC85 Reinsurance Management

Answer: (a).Increased stability in underwriting surplus and wider spread for net retained portfolio Explanation:The benefits derived from a reciprocal exchange of treaties are: (a) enabling the ceding insurer to add to their net premiums and net profits, and (b) providing a wider spread for the net retained portfolio of the insurer, resulting in greater stability in the underwriting surplus.

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Q. What are the two benefits derived from a reciprocal exchange of treaties?
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