Loss in year 1 equal [math]X[/math] and has an exponential distribution with mean 1,000. Loss in year 2 equals [math]Y[/math] and, conditional on [math]X[/math], has an exponential distribution with mean [math]X[/math].

Determine the expected value of the maximum annual loss observed in the first two years of coverage.

• 736
• 1,104
• 1,368
• 1,500
• 2,104