*Cost of Profit Commission: Simple QuantificationEarthquake
exposed California property pro-rata treatyLR = 40% in all years
with no EQProfit Comm when there is no EQ = 50% x ($1 of Premium -
$0.4 Loss - $0.30 Commission - $0.1 Reinsurers Margin)= 10% of
premiumCat Loss Ratio = 30%.10% chance of an EQ costing 300% of
premium, 90% chance no EQ lossExpected Cost of Profit Comm = Profit
Comm Costs 10% of Premium x 90% Probability of No EQ + 0% Cost of
PC x 10% Probability of EQ Occurring = 9% of Premium
