ABC Insurance Company entered into a reinsurance agreement with XYZ Reinsurance.Under the contract,XYZ Re has no liability unless ABC's loss ratio exceeds 85 percent for the year.XYZ Re agreed to pay all losses in excess of the 85 percent loss ratio.ABC Insurance Company is using reinsurance to

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This reinsurance agreement helps ABC Insurance Company stabilize profits by limiting losses when the loss ratio exceeds 85 percent, ensuring that extreme losses do not significantly impact their financial stability.

ABC Insurance Company Entered into a Reinsurance Agreement with XYZ