Reinsurance treaty

A reinsurance contract between a reinsured company and a reinsurer, usually for one year or longer, under which the reinsured company agrees to cede and the reinsurer agrees to assume risks of a particular class or classes of business. Such treaties may be of a participating type, which provides for sharing by reinsured and reinsurer of insurance policy liability, premiums, and losses or of an excess type. The latter provides for indemnity by the reinsurer only for loss which exceeds some specified predetermined amount.