Description
Assignment Question(s):(15 Marks)
Q1. Reinsurance is a form of insurance purchased by insurance companies in order to mitigate risk. Essentially, reinsurance can limit the amount of loss an insurer can potentially suffer. In other words, it protects insurance companies from financial ruin, thereby protecting the companies’ customers from uncovered losses. (5 Mark)
Questions:
a. How do reinsurance companies work?
b. What are the Reinsurance Contracts?
c. Give example of reinsurances companies in KSA and describe their main services
Q2. What is the concept of “Fair Value? Outline the basic difference between fair value and book value of an asset. Explain the key features of fair value defined by FASB ASC. (5 Marks)
Q3. XYZ Company has the following financial data:(5 marks)
Particulars
Amounts (SAR)
Total Profit for the Year
377,500
General Takaful Assets (Year 2014)
1,390,000
General Takaful Assets (Year 2015)
1,517,500
Cash
11,500
Short-term Investment
23,500
Short term liabilities
85,000
Underwriting Surplus Distributable to Participants/Participants’ Share of Profit
145,500
Gross Contribution
958,000
Net Contribution
662,500
Wakalah Fee
77,500
Commission Paid
28,300
Management Expense
58,000
Net Claim Incurred
287,500
Earned Contribution
632,500
You are required to calculate:
Return on Assets
Quick Liquidity
Surplus Distribution Ratio
Expense Ratio
Claims Ratio
