Question $3(15$ marks$)$ In the calendar year $2020,$ XYZ Insurance company has the following reinsurance program for its homeowners insurance portfolio.

Reinsurer A: a four$-$line surplus share treaty with a gross retention of $ $1$ million. Reinsurer B: a Per Risk excess of loss reinsurance of $$500,000$ excess of $$500,000$ for its retention under the surplus share treaty.

$3\mathrm{.}1$ XYZ insurance company underwrites a home with a total sum of insured of $2\mathrm{.}5$ million. There is a valid claim of $1\mathrm{.}8$ million from this home. How will this claim be paid by this reinsurance program? $(10$ marks$)$

$3\mathrm{.}2$ Explain how XYZ insurance company will guarantee the safety of the operation of the above reinsurance program. $(5$ marks$)$