Question 1

What does a cash call clause primarily protect?

Accepted Answer

The cedent's cash flow, by accelerating payment ahead of the normal settlement cycle — A cash call only changes timing — it lets the cedent get paid faster for a large loss, protecting its cash flow, without changing how much the reinsurer ultimately owes.

Question 2

What typically triggers a cash call?

Accepted Answer

A single loss, or losses, crossing an agreed threshold set out in the treaty — Cash call clauses are triggered by a defined threshold — a loss large enough that waiting for the normal settlement cycle would meaningfully strain the cedent's cash flow.

Cash Call

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