1. Background / context a) A GI company has a single line type of business b) The premium is a single premium to cover a 10 year period of risk (latent defect type of products) c) Assume the GWP is £100m d) All the GWP is ceded to a Reinsurer. The reinsurer pays a "placement fee" up front of 25% of GWP to the insurer. e) The movement is £100m from Ins. co. to RI, and £25m (placement fee) paid back to Ins. co by RI. f) In effect the placement fee is deemed to be 100% earned atthe signing of the contract 2. Questions: a) Assume that the premium is earned linearly (i.e at the end of the first year 10% has been earned and 90% unearned). b) is the UPR 90% of GWP (£100m) or 90% of GWP net of placement fee?: i.e is the UPR £90m or £67.5m = (90% of £75m). 3. Additional observations I appreciate that there normally the UPR is calculated on GWP net of acquisition cost, but in this instance the "placement fee" paid by the RI Co. is not an acquisition cost for the Ins. Co.