Glossary

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Term Definition Legal instruments

finite reinsurance

01/01/2016

THIS DEFINITION ONLY APPLIES TO THE CONDITIONS GOVERNING BUSINESS PART

means reinsurance:

(1) under which the explicit maximum loss potential arising from a significant transfer of both underwriting risk and timing risk exceeds the premium payable by the ceding undertaking over the duration of the contract by a limited but significant amount; and

(2) which possesses at least one of the following characteristics:

(a) explicit and material consideration of the time value of money;

(b) contractual provisions to moderate the balance of economic experience between the parties to the reinsurance over time to achieve the target risk transfer.

Additional Notes

[Note: Art. 210(3) of the Solvency II Directive]