Proportional CoversApplied

Cession Limit (Table of Lines)

The scale that caps what can be ceded

The schedule of maximum sums a surplus-share treaty will accept per risk, graded by class or quality, that sets how many "lines" of the cedent's retention it will absorb.

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Definition

A table of lines is the schedule attached to a surplus-share treaty specifying the maximum cession — expressed as a multiple, or number of "lines," of the cedent's own retention — that the treaty will accept for each class or quality of risk. It is graded rather than flat: a well-diversified, lower-hazard class might earn a higher number of lines than a more hazardous one. The cession limit set by the table directly determines how large a risk the treaty can absorb before the excess must be placed elsewhere, typically facultatively.

The table grades acceptance limits by class of business or risk quality, rather than applying one flat cession limit to every risk the cedent writes.
The number of lines the table allows, multiplied by the cedent's retention for that risk, sets the maximum total sum the surplus treaty can absorb.
A risk whose required cession exceeds the table's limit for its class cannot simply be squeezed into the treaty — the excess must go to a separate surplus layer or be placed facultatively.

Worked example

A surplus-share treaty's table of lines grants 10 lines for standard fire risks but only 5 lines for risks classified as higher-hazard, so a hazardous risk needing 8 lines of cession must place the excess above 5 lines facultatively.

Scenario · figures in USD

The same treaty, two very different limits

A surplus-share treaty's table of lines allows 12 lines for ordinary commercial property but only 6 lines for risks involving hazardous processing operations.

Cedent's retention on a standard property risk	$200,000
Table of lines limit for that class	12 lines
Maximum treaty cession for that risk	$2.4M
Cedent's retention on a hazardous-processing risk	$200,000
Table of lines limit for that class	6 lines
Maximum treaty cession for the hazardous risk	$1.2M

So whatIdentical retentions can support very different amounts of treaty capacity — the table of lines, not the retention alone, decides how much a surplus treaty will actually absorb.

Check your understanding

What does a table of lines specify?

Maximum acceptance limits per risk, graded by class or quality, expressed as multiples of the cedent's retention. A table of lines grades the treaty's maximum cession — its capacity in "lines" of retention — by class or quality of risk, rather than applying one uniform limit to everything.

What happens when a risk needs more cession than the table of lines allows for its class?

The excess above the table's limit must be placed elsewhere, typically facultatively. A risk exceeding its class's cession limit cannot be forced into the treaty — the amount above the table's limit needs a separate placement, usually facultative reinsurance.

Word problem

A cedent retains $150,000 on a commercial risk. Its surplus treaty's table of lines allows 9 lines for this risk's class. The risk has a total sum insured of $1.8M. How much can the treaty absorb, and does any amount need to be placed facultatively?

Show a hint

Multiply the retention by the allowed number of lines to find the treaty's maximum capacity, then compare that to the total sum insured.

Reveal the worked answer

Retention: $150,000. Table of lines limit: 9 lines.
Maximum treaty capacity: $150,000 × 9 = $1.35M.
Total capacity available (retention + treaty): $150,000 + $1.35M = $1.5M.
Total sum insured is $1.8M, which exceeds the $1.5M available — the remaining $300,000 must be placed facultatively.

The surplus treaty can absorb $1.35M on top of the $150,000 retention, for $1.5M total capacity. Since the risk's $1.8M sum insured exceeds that, the remaining $300,000 has to be placed facultatively — the table of lines caps what the treaty alone can take.

Related terms

Part of the Treaty Reinsurance guide, where this term is explained alongside every other treaty metric.