innovative instruments for transferring reinsurance business to the capital markets with the goal of refinancing or placing insurance risks.
Presentation of items from the annual financial statements separated according to functional criteria such as segments and regions.
Socially Responsible Investing (SRI)
Socially Responsible Investing is a term describing an investment strategy which seeks to maximise both financial return and social good.
Solvency II is a Directive in European Union law that defines solvency requirements for insurers and reinsurers with a view to reducing the risk of an insurer being unable to meet claims. Risk-based capital is at the core of Solvency II. A three-pillar approach is adopted: Pillar 1 covers the risk-based capital requirements, the rules used to calculate technical provisions and the verification of calculation models. Pillar 2 of Solvency II sets out, on the one hand, the supervisory principles and methods and, on the other hand, the qualitative requirements for conduct of an insurer's operations in terms of governance and risk management. Pillar 3 deals with market discipline, transparency and disclosure requirements as well as supervisory reporting.
Special Purpose Entity (SPE)
Legal structure with specific characteristics not bound to a certain form of organisation used to conduct defined activities or to hold assets.
Spread loss treaty
Treaty between an insurer and a reinsurer that covers risks of a defined portfolio over a multi-year period.
Reinsurance with limited potential for profits and losses. In most cases customers strive for risk equalisation over time or solvency relief, both of which have a stabilising effect on the ceding company's balance sheet.
Form of proportional reinsurance under which the risk is not spread between the insurer and reinsurer on the basis of a previously agreed, set quota share. Instead, the insurer determines a maximum sum insured per risk up to which it is prepared to be liable. Risks that exceed the ceding company's retention (surpluses) are borne by the reinsurer. The reinsurer's lines thus vary according to the level of the retention and the sum insured of the reinsured contract. The reinsurer's liability is generally limited to a multiple of the ceding company's retention.
Surplus relief treaty
A portfolio reinsurance contract under which an admitted reinsurer assumes (part of) a ceding company's business to relieve stress on the cedant's policyholders' surplus.
Reflects the ratio of loss reserves to paid losses under a specific contract or several contracts in a balance sheet year.