Placement StructuresCore

Line Slip & Subscription Market

One risk, many signatures

The document and market convention that let dozens of reinsurers each take a small share of the same risk instead of one carrier taking it all.

Open the interactive version → definition, quiz, structure diagram and progress tracking

Definition

Subscription market business is placed on a single slip — a summary of the risk, terms and pricing — that circulates among reinsurers, each of whom writes (signs) a percentage line. A leader negotiates terms and sets the price; followers subscribe to the leader's terms without renegotiating them. No single carrier need hold 100% of anything, and one signed slip can carry dozens of signatures.

The leader takes the largest line and does the underwriting work; followers rely on the leader's scrutiny and typically follow its terms, price and claims decisions almost mechanically.
Oversubscription is routine — followers offer more than the 100% needed, and the broker signs every line down pro rata to fit the placement back to exactly 100%.
Spreading one large risk across enough balance sheets means no single insolvency, however large, is catastrophic to the placement.

Signed line = Written line × (100% ÷ Total written %)

Applied to every subscriber when a slip is oversubscribed, so the whole placement still totals exactly 100%.

Worked example

A $500M energy risk is offered on a slip at 100%. Fourteen reinsurers write lines totalling 140% because the risk is attractive. The broker signs every line down by a factor of 100/140, so a reinsurer that wrote 20% is signed down to a 14.3% actual line.

Scenario · figures in USD

A slip oversubscribed by forty percent

A cargo treaty slip is offered at 100% capacity. The leader writes 15%; three followers write 40%, 35% and 50% respectively, for 140% written in total. The broker signs every line down proportionally to fit the placement to exactly 100%.

Total written on the slip	140%
Signing-down factor (100 ÷ 140)	71.43%
Leader — written 15%	Signed 10.71%
Follower A — written 40%	Signed 28.57%
Follower B — written 35%	Signed 25.00%
Follower C — written 50%	Signed 35.71%
Total signed lines	100.00%

So whatNobody actually carries the percentage they wrote — every subscriber's real share is scaled down by the same factor, so the placement always totals exactly 100% however enthusiastic the market was.

Check your understanding

On a subscription slip, what does a "follower" typically do?

Subscribes to the leader's terms and price without renegotiating them. Followers rely on the leader's scrutiny of the risk and generally accept its terms rather than re-underwriting the risk themselves.

A slip is oversubscribed at 120% written. What happens to each subscriber's line?

Every line is signed down proportionally so the total equals exactly 100%. The broker applies the same signing-down factor to every written line, so an oversubscribed slip always resolves back to exactly 100% signed.

Word problem

A $300M property slip is offered at 100%. The leader writes 20%, and five followers write 25%, 30%, 15%, 20% and 10% (120% written in total). Calculate each subscriber's signed line, confirm the placement totals 100%, and state the leader's actual dollar capacity on the risk once signed down.

Show a hint

Add up everything written, find the signing-down factor as 100 over that total, then apply it to every line — including the leader's.

Reveal the worked answer

Total written = 20 + 25 + 30 + 15 + 20 + 10 = 120%
Signing-down factor = 100 ÷ 120 = 83.33%
Leader (20%) signed to 20% × 83.33% = 16.67%
Followers signed to: 25%→20.83%, 30%→25.00%, 15%→12.50%, 20%→16.67%, 10%→8.33%
Sum of signed lines = 16.67 + 20.83 + 25.00 + 12.50 + 16.67 + 8.33 = 100.00%
Leader's dollar capacity = 16.67% × $300M = $50.0M

Every line is signed down by the same 83.33% factor, so the market's enthusiasm — 120% written — collapses back to exactly 100% signed. The leader, who wrote a fifth of the risk, actually carries $50.0M of the $300M, not the $60M its written 20% would suggest.