Reinsurance Glossary

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Minimum Cession: The smallest cession that a reinsurer will accept automatically. The minimum size is set to avoid the expenses associated with small cessions.
Modified Coinsurance: 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. Commonly known as Mod-co.
Mod-co: See Modified Coinsurance.
Mod-co Adjustment Interest Rate: In modified coinsurance, the interest rate used to calculate the amount payable by the ceding company in consideration of the reserves being transferred back to the ceding company by the reinsurer. See Mod-co Reserve Adjustment.
Mod-co Interest Rate: The interest rate used to determine the interest credited on the beginning reserves in a mod-co transaction.
Mod-co Reserve Adjustment: The net of two modified coinsurance items: the interest on reserves (payable by the ceding company to the reinsurer) and the increase in reserves (payable to the ceding company by the reinsurer). See Mod-co Adjustment Interest Rate.

Glossary of Reinsurance Terms compiled by
the American Council of Life Insurers (ACLI) Reinsurance Committee
and presented by Findalink.net

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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 be sought.

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