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A reinsurance contract (usually pro rata) under which the subject matter business must be ceded by the ceding company in accordance with contract terms and must be accepted by the reinsurer. Also known as Automatic Treaty.
A term used in run-off language for the part of a policy period greater than the twelve months of coverage usually provided in order to accommodate a special policy term need of an insured, such as bringing the policy anniversary date into conformity with other policies issued to the same insured.
To reduce the amount owed by one party to a second party under one agreement or transaction by crediting the first party with amounts the second party owes the first party under other agreements or transactions for the purpose of determining the amount, if any, the first party owes to the second. The use of "offset" as a verb and "setoff" as a noun has been consistently used in federal bankruptcy statutes since the first bankruptcy act was enacted in 1800. See also Counterclaim, Recoupment, and Setoff.
The sum of the net investment income and net underwriting income in any reporting period.
The arithmetic sum of two ratios: incurred loss to earned premium, and incurred expense to written premium. Considered the best simple index to current underwriting performance of an insurer.
A term used in both treaty and facultative reinsurance which incorporates by reference all of the terms (as well as amendments, modifications, alteration, and waivers) of the original policy written by the insurer that are not modified in the reinsurance contract, i.e., the location of the property and the rate, among others. See Follow the Fortunes, which is totally different in concept and is applicable only to treaty reinsurance, but which is often used in tandem with Original Conditions.
The insurer which writes a policy for a policyholder (which may or may not create the need for reinsurance).
The policy written by the original insurer.
The amount of insurance or reinsurance written which exceeds the insurer's or reinsurer's normal underwriting capacity, inclusive of automatic reinsurance facilities. See Underwriting Capacity.