## Mortality risk reinsurance 

Removing some of the major risk associated with life insurance from the client company. 

## Preferred risk coverage 

Coverage designed for applicants who represent a better-than- average risk to an insurer. 

## Primary insurance 

(Also known as direct insurance.) Insurance business relating to contracts directly between insurers and policyholders. The insurance company is directly responsible to the insured. 

## Premium 

Amounts paid to insure a risk. 

## Private placement 

An issue of securities that is not directed to the public and where the issued security is not registered or handled by any securities exchange. 

## Production 

Refers to new business that was produced during a specified period. 

## Portfolio 

The totality of risks assumed by an insurer or reinsurer. 

## Quota share 

( Also known as first dollar quota share.) A reinsurance arrangement in which the reinsurer receives a certain percentage of each risk reinsured. 

## Recapture 

The right to cancel reinsurance under certain conditions. 

## Reinsurance 

A type of insurance coverage that one company (the ceding company) purchases from another company (the reinsurer) in order to transfer risk associated with insurance. Through reinsurance a reinsurer “insures” the ceding company. 

## Reserves 

The amount required to be carried as a liability in the financial statement of an insurer or reinsurer in order to provide for future commitments under outstanding policies and contracts. 

## Retention limit 

The maximum amount of risk a company will insure on one life. Any amount in excess of the retention limit must be reinsured. 

## Retrocession 

A transaction in which the reinsurer transfers all or part of the risks it has assumed to another reinsurer (the retrocessionaire) in return for payment of premium. 

## Statutory capital 

The excess of statutory assets over statutory reserves, both of which are calculated in accordance with standards established by insurance regulators. 

## Treaty 

(Also known as a contract.) A reinsurance agreement between a reinsurer and a ceding company. The three most common methods of accepting reinsurance are automatic, facultative, and facultative-obligatory. The three most common types of reinsurance treaties are YRT, coinsurance, and modified coinsurance. 

## Underwriting 

The process by which a company assesses the risk inherent in an application for insurance prior to acceptance of the policy. 

## Variable life insurance 

A form of whole life insurance under which the death benefit and the cash value of the policy fluctuate according to the performance of an investment fund. Most variable life insurance policies guarantee that the death benefit will not fall below a specified minimum. 

