In Chapter 6, section 3.6, the notes comment that there are several ways in which aggregate XL reinsurance can be written. One way is given as "excess of a percentage (loss ratio) amount (for example, 50 loss ratio points in excess of 75 loss ratio points)" So does this mean that the XL limits are defined in terms of the original written premiums? So following on from the example above, if the direct writer received 100k in premiums, and then had aggregate claims of 200k, then the direct writer would pay the first 75k and the reinsurer would pay the next 50k of the aggregate claims?
That's correct DanielZ. The remaining 75k (ie in excess of 125 loss ratio points) would revert back to the direct writer.
