Commonly known as Mod-co.
Indemnity life reinsurance that differs from coinsurance only in that the reserves are transferred back to the Ceding Company while the risk remains with the reinsurer; the Ceding Company is required to pay interest to replace that which would have been earned by the reinsurer if it had held the assets corresponding to the reserves in its own investment portfolio.
Used to permit reserve Credit to be taken with respect to a non-admitted reinsurer, to secure Credit, and to retain control of investments.
See Funds Withheld and Coinsurance.