https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3AIndemnity_reinsurance_%28M%26A%29Definition:Indemnity reinsurance (M&A) - Revision history2026-04-30T13:19:59ZRevision history for this page on the wikiMediaWiki 1.43.8https://www.insurerbrain.com/w/index.php?title=Definition:Indemnity_reinsurance_(M%26A)&diff=10178&oldid=prevPlumBot: Bot: Creating new article from JSON2026-03-11T07:00:03Z<p>Bot: Creating new article from JSON</p>
<p><b>New page</b></p><div>🛡️ '''Indemnity reinsurance (M&A)''' is a [[Definition:Reinsurance | reinsurance]] structure used in insurance [[Definition:Merger and acquisition (M&A) | mergers and acquisitions]] where the [[Definition:Reinsurer | reinsurer]] agrees to indemnify the [[Definition:Ceding company | ceding insurer]] for losses arising from a transferred block of business, but the ceding company remains the insurer of record and retains its direct obligations to [[Definition:Policyholder | policyholders]]. No novation of the underlying [[Definition:Insurance policy | policies]] occurs — policyholders continue to look to the original carrier for [[Definition:Claims handling | claims payment]] and service, even though the economic risk has shifted to the reinsurer. This makes indemnity reinsurance far simpler to execute than [[Definition:Assumption reinsurance (M&A) | assumption reinsurance]], which requires policyholder notification and consent.<br />
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⚙️ In a typical M&A-related indemnity reinsurance transaction, the parties agree on a [[Definition:Ceded premium | ceded premium]] — usually calculated from the [[Definition:Loss reserve | loss reserves]] and [[Definition:Unearned premium | unearned premiums]] associated with the block — and establish detailed [[Definition:Claims handling | claims-handling]] protocols, reporting schedules, and [[Definition:Collateral | collateral]] arrangements. Because the ceding company retains legal liability, it bears [[Definition:Credit risk | credit risk]] on the reinsurer; to mitigate this, deals often require the assuming party to post [[Definition:Trust account | trust funds]], [[Definition:Letter of credit | letters of credit]], or other security. The ceding insurer continues to administer claims, sometimes under a [[Definition:Third-party administrator (TPA) | third-party administration]] agreement, while billing the reinsurer for covered losses. [[Definition:State insurance department | Regulators]] generally impose fewer procedural hurdles than they do for assumption deals, since policyholders' legal rights remain unchanged.<br />
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📊 Indemnity reinsurance is the workhorse structure in insurance M&A precisely because it balances economic finality with operational simplicity. Sellers can transfer the financial burden of legacy [[Definition:Long-tail liability | long-tail liabilities]] — such as [[Definition:Asbestos liability | asbestos]], environmental, or mass-tort exposures — without navigating the lengthy policyholder-consent process that assumption reinsurance demands. Buyers, often [[Definition:Run-off | run-off consolidators]] or capital-backed reinsurers, gain a predictable liability stream against which they can earn [[Definition:Investment income | investment income]]. The key risk for the ceding company is that, should the reinsurer become insolvent, the ceding insurer must still pay its policyholders — a reality that keeps [[Definition:Collateral | collateral]] negotiation at the center of every deal.<br />
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'''Related concepts:'''<br />
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* [[Definition:Assumption reinsurance (M&A)]]<br />
* [[Definition:Bulk reinsurance]]<br />
* [[Definition:Loss portfolio transfer (LPT)]]<br />
* [[Definition:Ceding company]]<br />
* [[Definition:Collateral]]<br />
* [[Definition:Run-off]]<br />
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