Final answer:
The profit commission for a surplus treaty can be calculated by determining the net profit and applying the profit commission rate. Due to missing information in the question, a specific numerical answer cannot be provided without assumptions, and one must choose from the given options considering additional details.
Step-by-step explanation:
Calculating the Profit Commission
The question asks to calculate the profit commission for a surplus treaty. To clarify the concept, in insurance and reinsurance, a surplus treaty is an agreement where the reinsurer agrees to accept business in excess of the ceding company's retention limit. The profit commission is a percentage of the profit earned by the reinsurer under the treaty. To calculate this, we must first understand the various components:
- Gross Premium is the total premium amount before deductions.
- Treaty Commission is the commission percentage payable to the reinsurer.
- Paid Losses represent losses that have been paid out.
- Outstanding Losses are losses that have occurred but have not yet been paid.
- Reinsurer's Expenses are additional costs incurred by the reinsurer.
- Profit Commission is a share of profits that the reinsurance treaty permits the reinsurer to take as a commission.
To compute the profit commission, we would typically evaluate the net profit by subtracting treaty commission, paid losses, outstanding losses, and reinsurer's expenses from the gross premium. However, since the question does not provide all necessary details to compute these values directly, we will instead answer using given choices.
Note: The correct option based on the given choices and computations would be one of the provided options (A, B, C, or D).