PARIS RE

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PARIS RE is a global provider of reinsurance solutions through its operating subsidiaries located in Switzerland, France, the United States, Singapore, Canada and Bermuda. The company operates in all lines of facultative and treaty reinsurance covering property, casualty, marine, aviation & space, credit & surety, life, accident & health as well as a wide range of other risks. At its formation, PARIS RE acquired essentially all of the active business of AXA RE. Based on consolidated financial figures at 31 December 2007, PARIS RE shareholders’ equity amounted to 2.474 billion US dollars. On a 12-month pro forma basis, PARIS RE wrote 1.411 billion US dollars in gross premiums in 2007.

 
 

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Glossary

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PART OF

Term used to clarify percentage shares, best illustrated by the following example: 20% of 75% = 15% of 100%, but 20% part of 75% = 20% of 100%.


PARTICIPATING REINSURANCE

A generic term describing all forms of QUOTA SHARE and SURPLUS REINSURANCE in which the REINSURER shares a pro rata portion of the losses and premiums of the CEDING COMPANY. Also PRO RATA REINSURANCE, PROPORTIONAL REINSURANCE.


PAY AS MAY BE PAID [UK]

A term providing that the REINSURER will follow the claims paid on the original policy without question, but only the claims which the reinsurer is liable to pay under the original policy. This usually does not include "ex gratia", "without prejudice" or "compromise" settlement.


PAYBACK (PLUS) [USA]

1) A method of rating under which the UNDERWRITER sets the price based upon his view of how frequently the loss event might occur over a period of time. Thus, if the underwriter felt that the loss would occur only once in five years, the price would be set (without regard to expenses and profit margins) to be equal to the limit divided by five and the contract would thus be said to have a "five year payback." Compare RATE ON LINE. 2) Can also refer to premium charged in addition to the cost of an ongoing program for prior losses and thus "payback" REINSURERs.


PLACEMENT SLIP [USA]

A temporary record of reinsurance arrangements for which coverage has been effected, pending replacement by a formal reinsurance contract. Also PLACING SLIP, SLIP. Compare BINDER.


PLACING SLIP [UK]

A temporary record of reinsurance arrangements for which coverage has been effected, pending replacement by a formal reinsurance contract. Also PLACEMENT SLIP, SLIP. Compare BINDER.


POLICIES ATTACHING BASIS [UK]

This term contrasts with LOSS OCCURRING BASIS. It indicates that liability attaches to the REINSURER in respect of policies issued and renewed by the CEDENT during the period of the reinsurance contract.


POLICY YEAR EXPERIENCE

Reinsurance experience calculated with all applicable premiums and losses assigned to the particular period (usually a 12-month period) in which each reinsured policy becomes effective. Also UNDERWRITING YEAR EXPERIENCE. Compare ACCIDENT YEAR EXPERIENCE and CALENDAR YEAR EXPERIENCE.


POOL

An organization of insurers or REINSURERs through which pool members underwrite particular types of risks with premiums, losses, and expenses shared in agreed amounts. Also ASSOCIATION, (UNDERWRITING) SYNDICATE.


PORTFOLIO - LOSS [UK]

A payment made to an incoming REINSURER or charged to an outgoing reinsurer equal to the estimated losses outstanding as at the dates of inception or cancellation of a REINSURANCE TREATY or contract.


PORTFOLIO - PREMIUM [UK]

A payment made to an incoming REINSURER or charged to an outgoing reinsurer equal to the unearned premium on in-force business. The incoming portfolio is to attach liability on an in-force basis thus simplifying accounting procedures, the outgoing is to effect a CLEAN-CUT arrangement.


PORTFOLIO [USA]

The liability of an insurer for the unexpired portion of the in-force policies or OUTSTANDING LOSSES or both for a described segment of the insurer's business.


PORTFOLIO ENTRY [UK]

The mechanics of attachment of a REINSURANCE TREATY at inception may be arranged on varying bases e.g., to new and renew business or in-force business, all referred to as "portfolio entry".


PORTFOLIO ORIGINAL PREMIUM [UK]

Represents the REINSURER's share of whole term premium for each initial, additional and return premium transaction.


PORTFOLIO REINSURANCE

A transaction sometimes defined by statute as any quota share, surplus aid or portfolio reinsurance agreement through which, of itself or in combination with other similar agreements, an insurer assumes all or a substantial portion of the liability of the reinsured company. Also PORTFOLIO TRANSFER and BULK REINSURANCE.


PORTFOLIO RETURN

Reassumption by a CEDING COMPANY of a PORTFOLIO.


PORTFOLIO RUN-OFF

Continuing the REINSURANCE of a portfolio until all ceded premium is earned or all losses are settled or both.


PORTFOLIO TRANSFER

A transaction sometimes defined by statute as any quota share, surplus aid or portfolio reinsurance agreement through which, of itself or in combination with other similar agreements, an insurer assumes all or a substantial portion of the liability of the reinsured company. Also PORTFOLIO REINSURANCE and BULK REINSURANCE.


PREMIUM BASE

The CEDING COMPANY's premiums (written or earned) to which the reinsurance premium rate is applied to produce the REINSURANCE PREMIUM. Sometimes also called GNEPI or GNWPI (Gross net earned, or written, PREMIUM INCOME) or SMPI (Subject Matter Premium Income). Also BASE PREMIUM, SUBJECT PREMIUM, UNDERLYING PREMIUM.


PREMIUM INCOME

Premium income comprises gross premiums written by the insurer or REINSURER over the course of the financial year.


PREMIUMS TO BE WRITTEN

Premium reserves representative of CEDANT premium payments expected to accrue. A similar approach is applied for COMMISSION and BROKERAGE.


PRIMARY [USA]

In REINSURANCE this term is applied to the nouns: insurer, insured, policy and insurance and means respectively, 1) the insurance company which initially originates the business, i.e., the CEDING COMPANY, 2) the policyholder insured by the PRIMARY INSURER, 3) the initial policy issued by the primary insurer to the primary insured, 4) the insurance covered under the primary policy issued by the primary insurer to the primary insured (sometimes called "underlying insurance").


PRIMARY INSURER

The insurer that CEDEs all or part of the insurance or REINSURANCE risk it has written to another insurer/REINSURER. Also CEDING COMPANY, CEDENT, CEDING INSURER, REINSURED and REASSURED.


PRIORITY

A term used in the French reinsurance market to mean RETENTION.


PRO RATA REINSURANCE

A generic term describing all forms of QUOTA SHARE and SURPLUS REINSURANCE in which the REINSURER shares a pro rata portion of the losses and premiums of the CEDING COMPANY. Also PROPORTIONAL REINSURANCE, PARTICIPATING REINSURANCE.


PROFESSIONAL REINSURER

An underwriter or REINSURER whose business is confined solely to REINSURANCE and the peripheral services offered by a reinsurer to its customers.


PROFIT COMMISSION

An allowance payable to the CEDING COMPANY in addition to the normal CEDING COMMISSION, based on a predetermined percentage of the REINSURER's net profits after a charge for the reinsurer's overhead, which is derived from the subject treaty. Also CONTINGENT COMMISSION.


PROPORTIONAL REINSURANCE

A generic term describing all forms of QUOTA SHARE and SURPLUS REINSURANCE in which the REINSURER shares a pro rata portion of the losses and premiums of the CEDING COMPANY. Also PARTICIPATING REINSURANCE, PRO RATA REINSURANCE.


PROPORTIONAL REINSURANCE CLAUSE [UK]

A clause that provides that REINSURANCE is ceded and accepted. The REINSURER is bound to accept the liability on the business that is specifically ceded under the contract.


PROSPECTIVE RATING

A type of EXPERIENCE RATING used in arriving at the reinsurance rate and premium for a specified period, based in whole or in part, on the loss experience of a prior period. Also RETROSPECTIVE RATING, SELF RATING. Compare SPREAD LOSS REINSURANCE.


PROTECTION PROGRAM

Non-proportional reinsurance protection program providing coverage for losses arising from any one risk or from the aggregate of multiple risks covered by the terms of the company's reinsurances. Covers within the program may provide comprehensive protection or protection specific to a geographic area or CLASS OF BUSINESS.


PROVISIONAL RATE, PREMIUM or COMMISSION

Tentative or estimated amounts subject to subsequent adjustment.


PURE LOSS COST [USA]

The ratio of the reinsurance losses incurred to the CEDING COMPANY's SUBJECT PREMIUM. Also BURNING COST.


QUOTA SHARE REINSURANCE

A form of PRO RATA REINSURANCE indemnifying the CEDING COMPANY for a fixed percent of loss on each risk covered in the contract in consideration of the same percentage of the premium paid to the ceding company.


RATE

The percentage or factor applied to the CEDING COMPANY's SUBJECT PREMIUM to produce the REINSURANCE PREMIUM or the percent applied to the REINSURER's premium to produce the COMMISSION.


RATE ON LINE - ROL [USA]

Same as PAYBACK except that the price is quoted as a percentage of the limit. Thus, a 20 percent rate on line would be equivalent to a five-year payback.


REASSURANCE

Same as REINSURANCE except that the term is generally used in reference to life insurance.


REASSURED

Same as REINSURED except that the term is generally used in reference to life insurance.


REASSURER

Same as REINSURER except that the term is generally used in reference to life insurance.


RECIPROCITY

A mutual exchange of REINSURANCE between two or more companies.


REINSTATEMENT

A provision in EXCESS OF LOSS REINSURANCE, CATASTROPHE REINSURANCE or CLASH COVER that provides for reinstatement of a limit which is reduced by the occurrence of a loss or losses. The number of times that the limit can be reinstated varies, as does the cost of the reinstatement.


REINSURANCE

The transaction whereby the assuming insurer, for consideration, agrees to indemnify the CEDING COMPANY against all, or a part, of the loss which the latter may sustain under the policy or policies which it has issued.


REINSURANCE PREMIUM

The consideration paid by a CEDING COMPANY to a REINSURER for the coverage provided by the reinsurer.


REINSURANCE TREATY

A reinsurance contract under which the reinsured company agrees to CEDE and the REINSURER agrees to ASSUME risks of a particular class or classes of business.


REINSURANCE WAIVER CLAUSE [UK]

Clause which provides that both parties to the reinsurance contract agree to waive payment of small additional premium or return premiums without prejudice to their rights.


REINSURANCE WARRANTY

A warranty to the REINSURER that the CEDING COMPANY will retain (net) a specified amount of insurance or that no higher layer of EXCESS OF LOSS REINSURANCE is carried. Also WARRANTY.


REINSURED

The insurer which CEDEs all or part of the insurance or REINSURANCE risk it has written to another insurer/REINSURER. Also CEDING COMPANY, CEDENT, CEDING INSURER and PRIMARY INSURER.


REINSURER

The insurer which assumes all or a part of the insurance or REINSURANCE risk written by another insurer. Also REINSURING COMPANY.


REINSURER'S EXPENSES [UK]

A debit item which appears on the PROFIT COMMISSION statement provided for under some PROPORTIONAL REINSURANCE treaties to make allowance thereunder for the diminution of the REINSURER's profit by its own management expenses, including any ACQUISITION COSTS not otherwise debited in the profit commission statement.


REINSURING CLAUSE [UK]

This clause is the cornerstone of the reinsurance contract. It outlines the business reinsured by the contract.


REINSURING COMPANY

The insurer which assumes all or a part of the insurance or REINSURANCE risk written by another insurer. Also REINSURER.


RESERVES - PREMIUM AND LOSS [UK]

Amounts of ceded premiums and/or loss withheld from the REINSURER by the CEDENT in order to provide the cedent with collateral security for the due performance of the obligations of the reinsurer under a REINSURANCE TREATY.


RETAINED LINE [UK]

The proportion of a LINE written by a REINSURED and not ceded to his REINSURER. Compare RETENTION.


RETENTION

The amount of risk the CEDING COMPANY keeps for its own account or the account of others. Compare DEDUCTIBLE.


RETROCEDENT [UK]

A REINSURER who retrocedes


RETROCESSION

A REINSURANCE transaction whereby a REINSURER (the RETROCEDENT) CEDEs all or part of the reinsurance risk it has ASSUMED to another reinsurer (the RETROCESSIONNAIRE).


RETROCESSIONNAIRE [UK]

A REINSURER who accepts RETROCESSION business.


RETROSPECTIVE RATING

A type of EXPERIENCE RATING used in arriving at the reinsurance rate and premium for a specified period, based in whole or in part, on the loss experience of a prior period. Also SELF RATING, PROSPECTIVE RATING. Compare SPREAD LOSS REINSURANCE.


RISK EXCESS [UK]

Type of WORKING COVER, usually subject to an aggregate limit, designed to protect the CEDING COMPANY's liability on an individual risk. Also ANY ONE RISK COVER.


RUN-OFF

A termination provision of a reinsurance contract that stipulates the REINSURER remains liable for losses as a result of occurrences taking place after the date of termination for reinsured policies-in-force at the date of termination until their expiration or for a specified time period.


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