Granite Insurance Company entered into a treaty reinsurance agreement

Granite Insurance Company entered into a treaty reinsurance agreement with Rock Solid Reinsurance (RSR). Granite’s retention limit is $400,000 and RSR agreed to provide reinsurance for up to $2.0 million.

If Granite writes an $800,000 policy, RSR is responsible for 50 percent of the losses. If Granite insures a $1.6 million risk, RSR is responsible for 25 percent of any losses. What type of reinsurance arrangement did Granite enter into with RSR?
A) facultative reinsurance
B) surplus share reinsurance
C) quota share reinsurance
D) excess of loss reinsurance

ANSWER

Answer: B