Definitions

Maximum amount of insurance that can be paid for a covered loss.

Insurance for what the policyholder is legally obligated to pay because of bodily injury or property damage caused to another person.

US GAAP after-tax income after debt cost divided by GAAP Equity

Portion of Total Equity that is debt versus shareholder equity.  An example is if something is levered .4 to1 then it has approximately 30% (.4/1.4) Debt and 70% GAAP Equity.

A financial guaranty issued by a bank that permits the party to which it is issued to draw funds from the bank in the event of a valid unpaid claim against the other party. In reinsurance, typically used to permit reserve Credit to be taken with respect to non-admitted reinsurance; and Alternative to funds withheld … Read more

The reinsurer who negotiates the terms, conditions, and premium rates and first signs on to the Slip. Reinsurers who subsequently sign on to the Slip under those terms and conditions are considered following reinsurers.

A method of allocating automatic reinsurance among several reinsurers. Using this method, reinsurance is ceded in layers. The layers are defined in terms of amounts of insurance. One reinsurer will receive all reinsurance up to the limit of the first layer. A second reinsurer will receive all reinsurance in excess of the first layer up … Read more

A horizontal segment of the liability insured, e.g., the second $100,000 of a $500,000 liability is the first layer if the cedant retains $100,000 but a higher layer if it retains a lesser amount.

The theory of probability on which the business of insurance is based. Simply put, this mathematical premise says that the larger the group of units insured, such as sport-utility vehicles, the more accurate the predictions of loss will be.

A technique that consists of staggering the maturity dates and the mix of different types of bonds.