Underlying Retention
 |
Definition of 'Underlying Retention'The net amount of risk or liability arising from an insurance policy (or policies) that is retained by a ceding company after reinsuring the balance amount of the risk or liability. The degree of underlying retention will vary depending on the ceding company's assessment of the risks involved in retaining part of the policy liability and the profitability of the insurance policy. |
 |
Investopedia explains 'Underlying Retention'Since reinsurance requires the payment of a premium to the reinsurer, underlying retention enables an insurer to avoid payment of this reinsurance premium. The insurer will generally retain the most profitable policies or their lowest-risk components, while reinsuring less profitable, higher-risk policies. |
Related Definitions
Articles Of Interest
-
How An Insurance Company Determines Your Premiums
Find out how insurers use credit history to build an insurance score and how it could affect your bottom line. -
Event-Linked Bonds: Competing Against A Catastrophe
These debt instruments can blow new wind into your portfolio, but only if you can handle the risk. -
When Things Go Awry, Insurers Get Reinsured
Guru Warren Buffett is making this sector popular. Learn more here. -
What is reinsurance?
Reinsurance occurs when multiple insurance companies share risk by purchasing insurance policies from other insurers to limit the total loss the original insurer would experience in case of disaster. ... -
Exploring Advanced Insurance Contract Fundamentals
Understanding your contract can help you protect our family's financial security. -
5 Things You Should Know About The New Health Insurance Marketplace
Here are five things you should know about the new Health Insurance Marketplace (AKA Health Insurance Exchange), which launches on October 1. -
What changes might I need to make to my insurance policy?
The number one thing to remember about insurance is that, just like everything else, it changes over time. The top-of-the-line policy that you bought five years ago might not even be available ... -
The Beginner's Guide To Homeowners' Insurance
Discover everything new homeowners need to know before they sign on the dotted line. -
Life Insurance Clauses Determine Your Coverage
Understanding these key parts of your policy will help you to ensure that your family will be covered. -
Why would you want a monthly benefit versus a daily benefit?
An insurance benefit is the amount of money paid to or on behalf of the policyholder. Depending on what kind of insurance policy the policyholder signs up for, the payments are made directly ...
Free Annual Reports