Surplus Reinsurance; Surplus Share Reinsurance

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 keep for its own account small policies, and to transfer the amount of risk on large policies above its retention limit.