Definitions

The markets in which equities and debt are traded. See Securitization of insurance risk

Shareholder’s equity (for publicly-traded insurance companies) and retained earnings (for mutual insurance companies). There is no general measure of capital adequacy for property/casualty insurers. Capital adequacy is linked to the riskiness of an insurer’s business. A company underwriting medical device manufacturers needs a larger cushion of capital than a company writing Main Street business, for … Read more

The supply of insurance available to meet demand. Capacity depends on the industry’s financial ability to accept risk. For an individual insurer, the maximum amount of risk it can underwrite based on its financial condition. The adequacy of an insurer’s capital relative to its exposure to loss is an important measure of solvency. A property/casualty … Read more

(a) Run-off basis means that the liability of the reinsurer under policies, which became effective under the treaty prior to the cancellation date of such treaty, shall continue until the expiration date of each policy; (b) Cut-off basis means that the liability of the reinsurer under policies, which became effective under the treaty prior to … Read more

Underwriting results allocated back to a given calendar Year accounting period where the losses occurred. The results are allocated back to the time frame when loss occurred regardless of when the losses are actually reported, booked, or paid. Compare with Accident Year of Experience and Underwriting Year of Experience.

A form of variable Annuity contract where the contract holder pays no sales up front or surrender charges. Owners can claim full liquidity at any time.

A term most frequently used in spread loss property reinsurance to express pure loss cost or more specifically the ratio of incurred losses within a specified amount in excess of the Ceding Company’s retention to its gross premiums over a stipulated number of Years. The premium needed to cover losses based on historical experience for a proposed reinsurance agreement.

A transaction sometimes defined by statute as any Quota Share, surplus aid or portfolio reinsurance agreement through which, of itself or in combination with other similar agreements, an insurer assumes all or a substantial portion of the liability of the reinsured company.

A method of reinsurance administration by which the Ceding Company maintains the detailed records for each policy and the reinsurer accepts summary reports of that business.

Layer of coverage between the primary layers and excess layers. If the primary insurer will only insure $500,000, and the excess insurer wants at least $1 million before the excess insurer attaches the policy, we fill the gap ($500,000 excess $500,000).