Market Participants
Cedent
Definition
The insurance company that transfers (cedes) risk to a reinsurer. Also called the ceding company or reinsured. Primary insurers are cedents to reinsurers.
Practical Example
State Farm acting as cedent when purchasing catastrophe reinsurance.
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Related Terms
Market Participants
Reinsurer
Company that accepts insurance risk transferred from cedents. Provides capacity and risk diversification to the insurance market.
Reinsurance Types
Treaty Reinsurance
A reinsurance agreement covering a specified portfolio of risks over a period of time. The reinsurer agrees to accept all risks within the treaty terms, providing automatic coverage.