Question $2(10$ marks$)$

a$.$ Give two differences of hedging and insurance? $(4$ marks$)$

b$.$ How can insurance benefit to the society? Give three points $(6$ marks$)$Question $1(15$ Marks$)$

The insurance company Helmet is considering acquiring BeSafe, a life insurance company.

According to BeSafe's most recent financial statements, its loss ratio stands at $0\mathrm{.}9,$ and its

expense ratio stands at $0\mathrm{.}5.$ Based on this information, answer the following questions:

a$.$ Explain what the loss ratio of $0\mathrm{.}9$ means.

b$.$ Explain what the expense ratio of $0\mathrm{.}5$ means.

c$.$ Would you recommend this acquisition to Helmet? Why or why not?