- Reinsurance of individual risks at the option of the reinsurer and
the ceding company, whether under a treaty of reinsurance or by
negotiation in respect of an individual risk. The reinsurer is
free to accept or reject the offerings of the ceding company.
The reinsurer may specify its own ratings or terms for the
- A form of life reinsurance which is a hybrid between facultative
and automatic. The risk to be ceded is submitted to the
reinsurer, which has limited rights to decline individual risks.
- A reinsurance pool established for the Federal Employees Group
Life Insurance program.
- Reinsurance transacted primarily to achieve financial goals, such
as capital management, tax planning, or the financing of
- First Excess
- In layering, the specified amount in excess of the ceding
company's retention that is ceded to a particular reinsurer or group
of reinsurers. For example, the first $300,000 in excess of
the ceding company's retention of $100,000. See Layer,
Layering, and Second
- Follow the
- A phrase referring to a provision found in some reinsurance
contracts stipulating that once a risk has been ceded, the reinsurer
is bound by the same fate as the ceding company for that risk.
- Foreign Reinsurer
- A reinsurer writing business in a state in which it is not
- A situation where one insurer issues policies and reinsures all or
substantially all of the risk to another insurer. Fronting
typically is used in jurisdictions where the reinsurer is not
licensed to do business.
- Fronting Company
- In a fronting arrangement, the licensed insurer (ceding company)
that obtains regulatory approval for an insurance product, sells the
product, and cedes all or most of the risk to a company that is not
licensed to do business in the jurisdiction.
- Funds Withheld
- Assets that would normally be paid over to a reinsurer but are
withheld by the ceding company to permit statutory credit for
non-admitted reinsurance, to reduce the potential credit risk, or to
retain control over investments. Under certain circumstances,
the reinsurer may withhold funds from the ceding company. See Modified
- Funds Withheld
- A form of modified coinsurance where the initial allowance which
is normally paid to the ceding company is withheld by the reinsurer
to reduce the reinsurer's exposure to risk.
Glossary of Reinsurance Terms compiled by
the American Council of Life
and presented by Central Security Life Insurance Company (CSLIC).
This text, or any part thereof, may not be reproduced or transmitted in any
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While a great deal of care has been taken to provide accurate, current, and
authoritative information in regard to the subject matter covered in this
reinsurance glossary, the ideas suggestions, general principles, conclusions, and any other
information presented here are for educational purposes only. This reinsurance glossary is
provided with the understanding that it is neither designed nor intended
to provide the reader with legal, accounting, investment, marketing, or other
types of professional business management advice. If legal advice or other
expert assistance is required, the services of a competent professional should