first surplus reinsurance treaty

  • One of the oldest forms of treaty, and still the most common in fire reinsurance is based on the reinsurer sharing the gross lines of an insurance company on a pro rata basis, the proportion being varied automatically according to: Different classes of risks The net retentions that the insurance company keeps for its own account By the provisions that have been developed, a company can retain for its own account as large a line as it can afford or desires on each risk, while automatically reinsuring any surplus frequently up to a large amount.

    Internal Revenue Service 1
    See also treaty

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).