- The total amount of liability or risk that an insurer retains from an insurance policy (or a number of insurance policies) after ceding liability or risk to a reinsurer. Because reinsuring a policy requires the ceding party to pay the reinsurer premiums, and premiums cut away at an insurer's profits, depending on the potential of risk and the profitability of an insurance policy, the underlying retention will vary.
remaining liability after reinsurance, remaining retention
Related Terms and Acronyms
- Ceding Party — Definition,
- In reinsurance, a ceding party is an insurance company that spreads liability to a reinsurer in order to lower risk.
- Finite Reinsurance — Definition,
- A reinsurance arrangement where the reinsurer only takes on a limited amount of risk from the ceding party.
- Insurance (insur) — Abbreviation,
- An arrangement where one party provides financial protection to another party for specific damages or losses.
- Lloyd's of London — Company,
- A market for insurance and reinsurance based in London, England where Lloyd's members, underwriters and financial backers can spread and share risk.
- Premium — Definition,
- A payment made to an insurance company for insurance coverage.
- Reinsurance — Definition,
- The process of one insurance company sharing liabilities from an insurance policy with another insurance company in order to lessen exposure, or in other words, insurance for insurers.
- Reinsurance Ceded — Definition,
- The amount of insurance that is reinsured with another insurance company.
- Reinsurance Recoverables to Policyholder Surplus — Definition,
- A method used to determine how much an insurer relies on reinsurance.
- Reinsurer — Definition,
- An insurance company that provides coverage for a portion of another insurance company's risk.