The formal ending of a reinsurance agreement by its natural expiry, cancellation or commutation by the parties. Terminations can be either on a cutoff or runoff basis. Under cutoff provisions, the parties’ obligations are fixed as of the agreed cutoff date. Otherwise, obligations incurred while the agreement was in force are run off to their … Read more
A form of reinsurance contract written for a stipulated term (usually one Year). The contract automatically expires at the end of the term and renewal must be negotiated. See also Continuous Contract.
Certain high valued bridges, tunnels and fine arts collections which are excluded from reinsurance contracts and release the reinsurer of any potential high accumulation of liability on any one risk from various sources; a large hazardous risk on which insurance is difficult to place; or a large attractive risk which is considered a target for … Read more
Varies by location and purpose. Typically driven by local regulatory requirements and then set by management, (i.e. US 200% RBC, UK 150% RMM, etc.)
A method of splitting reinsurance coverage among several reinsurers.
The simultaneous buying, selling or exchange of one security for another among investors to change maturities in a bond portfolio, for example, or because investment goals have changed.
A form of proportional reinsurance where the reinsurer assumes pro rata responsibility for only that portion of any risk which exceeds the company’s established retentions.
Reinsurance which increases the surplus of the Ceding Company at the inception of the transaction.
Automatic reinsurance that requires a Ceding Company to transfer (cede) and the reinsurer to accept the part of every risk that exceeds the Ceding Company’s predetermined retention limit. The reinsurer shares in premiums and losses in the same proportion as it shares in the total policy limits of the risk. The surplus method permits the Ceding Company to … Read more
A contract guaranteeing the performance of a specific obligation. Simply put, it is a three-party agreement under which one party, the surety company, answers to a second party, the owner, Creditor or “obligee,” for a third party’s debts, default or nonperformance. Contractors are often required to purchase surety bonds if they are working on public … Read more
