Question 1

What does "net retained line" measure?

Accepted Answer

The insurer's final net retention on a risk after every layer of outward reinsurance has been applied — Net retained line is what remains with the insurer after all its outward reinsurance cessions are applied — its true net exposure, not its original gross line.

Question 2

What happens when a risk's net retained line, after normal reinsurance, would exceed the insurer's maximum for that class?

Accepted Answer

The excess must be reduced further, typically through facultative reinsurance — When normal treaty reinsurance leaves a net retained line above the insurer's set maximum for that class, the excess is typically placed facultatively to bring it back within limits.

Net Retained Lines

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