Ceding Company

Insurance purchased by an insurance company (the ceding company) from another insurance company (the reinsurer) to transfer risk and protect against large losses. Reinsurance allows insurers to underwrite policies covering higher risks and larger amounts than they could handle independently.

An insurance company that assumes risk from another insurance company through a reinsurance agreement. The reinsurer provides financial protection to the ceding company against large or catastrophic losses.

A fee paid by the reinsurer to the ceding company to cover the ceding company's acquisition costs, administrative expenses, and profit margin. This compensates the ceding company for originating and servicing the business.

The amount of risk that the ceding company keeps for its own account before reinsurance coverage applies. Also called the deductible or attachment point in some contexts. Higher retention means the ceding company bears more risk but pays lower reinsurance premiums.

A business professional who analyzes probabilities of risk and risk management, including calculation of premiums, dividends, and other applicable insurance industry standards.

The process by which an insurer evaluates the risk of insuring a person or property and determines coverage terms and premium rates.

The ratio of losses paid plus loss reserves to premiums earned, used by insurers to measure underwriting profitability and pricing adequacy.

The sum of the loss ratio and expense ratio, measuring an insurer's overall underwriting profitability. A ratio below 100% indicates underwriting profit.