A reinsurance agreement by which one company permanently transfers full responsibility for a block of policies to another company.
This transfer is done in exchange for the assets underlying the liabilities and the right to receive future premiums; it is evidenced by an assumption certificate issued to the insured who, in some jurisdictions, has the right to refuse the change of insurers.
After the transfer, the Ceding Company is no longer a party to the reinsurance agreement. While this is referred to as “reinsurance,” it is actually a novation.
See Novation.