Portfolio Reinsurance
What Does Portfolio Reinsurance Mean?
Portfolio reinsurance involves the transfer of a large number of insurance policies from one company to another. These transferred policies may include specific insurance products, such as commercial property policies, or all policies from a particular region or territory. Insurance companies use portfolio reinsurance to protect themselves from insolvency.
Insuranceopedia Explains Portfolio Reinsurance
Reinsurance involves the transfer of risks from an insurance company to a reinsurance company. The company transferring the risk is known as the ceding company, while the company assuming the risk is called the reinsurer.
In portfolio reinsurance, a large number of policies are transferred. This type of reinsurance may be used when the ceding company is no longer confident in its ability to fund a specific type of policy after issuing several, or if the company shifts its business focus. In such cases, the reinsurer assumes responsibility for the liabilities of the ceded risks.
