What is Retention Limit?
Retention Limit The maximum risk amount an insurer or reinsurer retains before transferring the excess to another reinsurer, as stipulated in reinsurance agreements.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Retention Limit” Used in Practice?
The insurer set a retention limit of $1 million per risk before ceding excess loss to the reinsurer.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Retention Limit?
The maximum risk amount an insurer or reinsurer retains before transferring the excess to another reinsurer, as stipulated in reinsurance agreements.
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