When using a rate higher than the risk-free rate in cases where the reinsurer has a higher expected investment yield, which concern is most relevant?

When using a rate higher than the risk-free rate in cases where the reinsurer has a higher expected investment yield, which concern is most relevant?

• A. It does not matter for discounting
• B. Reinsurer yield not known by ceding
• C. Reinsurer yield is known by the ceding
• D. Reinsurer yield is assumed to be equal to the risk-free rate

Answer: (B)