DEFINITION of Ceded Reinsurance Leverage Ceded Reinsurance Leverage is the ratio of ceded insurance balances to policyholders’ surplus. Ceded reinsurance leverage represents the extent to which an insurance company relies on ceding risk to reinsurers. This includes ceded premiums, net balances for unpaid losses and unearned premiums. BREAKING DOWN Ceded Reinsurance Leverage Companies use reinsurance as
What Is a Cedent? A cedent is a party in an insurance contract who passes the financial obligation for certain potential losses to the insurer. In return for bearing a particular risk of loss, the cedent pays an insurance premium. The term cedent is most often used in the reinsurance industry, although the term could apply to
What Is a Ceding Commission? A ceding commission is a fee paid by a reinsurance company to a ceding company to cover administrative costs, underwriting, and business acquisition expenses. The commission also helps the ceding company offset loss reserve premium funds. Reinsurance is a method for insurers to spread the risk of underwriting policies by
A ceding company is an insurance company that passes a portion or all of the risk associated with an insurance policy to another insurer. Ceding is helpful to insurance companies since the ceding company that passes the risk can hedge against undesired exposure to losses. Ceding also helps the ceding company to free up capital to use
What Is a Ceiling? In finance, a ceiling is the maximum permitted level in a financial transaction. The term can be applied to a variety of factors, such as interest rates, loan balances, amortization periods, and purchase prices. Ceilings are often used to control risks, by imposing an upper limit to the size or cost
What Is the Celler-Kefauver Act? The Celler-Kefauver Act is one of several U.S. laws designed to prevent certain mergers and acquisitions (M&A) from creating monopolies or otherwise significantly reducing competition in the United States. It was passed in 1950 to strengthen existing antitrust laws and close loopholes present in the Clayton Act and the Sherman Antitrust Act.
What Is the Centipede Game? The centipede game is an extensive-form game in game theory in which two players alternately get a chance to take the larger share of a slowly increasing money stash. It is arranged so that if a player passes the stash to their opponent who then takes the stash, the player
What Is the Central Limit Theorem (CLT)? In probability theory, the central limit theorem (CLT) states that the distribution of a sample variable approximates a normal distribution (i.e., a “bell curve”) as the sample size becomes larger, assuming that all samples are identical in size, and regardless of the population’s actual distribution shape. Put another
What Is the XAF (Central African CFA Franc)? The XAF (Central African CFA Franc) is the official currency of six central African countries. Launched in 1945 as the franc of the French Colonies of Africa, it is backed by the French treasury and pegged to the euro. Key Takeaways The XAF (Central African CFA Franc)
What Is a Central Bank? A central bank is a financial institution given privileged control over the production and distribution of money and credit for a nation or a group of nations. In modern economies, the central bank is usually responsible for the formulation of monetary policy and the regulation of member banks. Central banks
