Ceding premium to proportional agreements

When you calculate the ceded premiums for proportional risks, you calculate the actual percentage of risk that is held by each of the proportional agreements. A modified TIV is the denominator.

Modified Total Insured Value (TIV) represents the amount of risk shared proportionally between the insurer the proportional agreements. The modified TIV is the TIV minus any amounts that any excess of loss treaties or agreements cover. Net excess of loss and aggregate treaties are not deducted because they apply only to the insurer’s net risk after deducting amounts ceded proportionally.

Calculate the modified Total Insured Value (TIV):
```
Modified TIV = Actual TIV - Amount of Risk in XOL Layer
```
For each proportional agreement, calculate the ceded premium:
1. Calculate the proportional share of risk
  If this is a facultative proportional agreement that specifies a Ceded Share (%), use this formula:
```
Proportional Share of Risk = Ceded Share Percentage
```
  Otherwise, use the following formula:
```
Proportional Share of Risk = Amount of Risk Ceded / Modified TIV
```
2. Calculate the ceded premium:
  If this is a facultative proportional agreement that specifies a flat amount for ceded premium, then cede that amount.
  Otherwise, use the following formula:
```
Prop Ceded Premium = GNP * Proportional Share of Risk
```

The process continues and cedes the premium to the facultative net excess of loss agreements. See Ceding premium to facultative net excess of loss agreements.