https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3ARetrocessionDefinition:Retrocession - Revision history2026-06-13T10:27:03ZRevision history for this page on the wikiMediaWiki 1.43.8https://www.insurerbrain.com/w/index.php?title=Definition:Retrocession&diff=7102&oldid=prevPlumBot: Bot: Creating new article from JSON2026-03-10T05:11:20Z<p>Bot: Creating new article from JSON</p>
<p><b>New page</b></p><div>🔄 '''Retrocession''' is the practice by which a [[Definition:Reinsurer | reinsurer]] cedes a portion of the risk it has already assumed from a [[Definition:Primary insurer | primary insurer]] to another reinsurer, known as a [[Definition:Retrocessionaire | retrocessionaire]]. In essence, it is reinsurance of reinsurance — a secondary layer of [[Definition:Risk transfer | risk transfer]] that allows reinsurers to manage the concentration and volatility of the portfolios they have accepted. Retrocession plays a critical role in the global [[Definition:Reinsurance | reinsurance]] market, particularly for companies with significant exposure to [[Definition:Catastrophe risk | catastrophe risk]] or large individual accounts.<br />
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⚙️ A reinsurer entering into a retrocession arrangement negotiates a [[Definition:Retrocession agreement | retrocession contract]] with one or more retrocessionaires, specifying the type and scope of risks being transferred. The mechanics mirror those of traditional reinsurance: retrocession can be structured on a [[Definition:Quota share | quota share]] basis, where a fixed percentage of premiums and losses is shared, or on an [[Definition:Excess of loss | excess of loss]] basis, where the retrocessionaire responds only after losses exceed a specified threshold. [[Definition:Lloyd's syndicate | Lloyd's syndicates]], large global reinsurers, and [[Definition:Special purpose vehicle (SPV) | special purpose vehicles]] backed by [[Definition:Insurance-linked securities (ILS) | insurance-linked securities]] capital frequently participate as retrocessionaires, making retrocession a vital channel through which [[Definition:Underwriting risk | underwriting risk]] is ultimately distributed across the broadest possible base of capital.<br />
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💡 Without retrocession, the world's largest reinsurers would face dangerous accumulations of exposure, particularly from correlated perils like hurricanes, earthquakes, or pandemics. By dispersing risk further into the market — including to [[Definition:Capital markets | capital markets]] participants through [[Definition:Catastrophe bond | catastrophe bonds]] and [[Definition:Collateralized reinsurance | collateralized reinsurance]] — retrocession strengthens the overall resilience of the insurance value chain. Regulators and [[Definition:Rating agency | rating agencies]] closely monitor retrocession usage because it directly affects a reinsurer's [[Definition:Net retention | net retention]], [[Definition:Solvency | solvency]] position, and [[Definition:Credit risk | credit risk]] profile. When retrocession capacity tightens — as it did following several years of elevated catastrophe losses — the pricing effects ripple forward into the primary insurance market, ultimately influencing the cost and availability of coverage for policyholders.<br />
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'''Related concepts'''<br />
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* [[Definition:Reinsurance]]<br />
* [[Definition:Retrocessionaire]]<br />
* [[Definition:Excess of loss]]<br />
* [[Definition:Catastrophe bond]]<br />
* [[Definition:Insurance-linked securities (ILS)]]<br />
* [[Definition:Net retention]]<br />
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