When gross premiums written are reduced by ceded reinsurance premiums in financial statements, the result is termed as:

Question

Options

• Anet premiums written
• Bceded premiums
• Cnet analyzed premiums
• Dearn premiums written

• A
  68% (13)
• B
  11% (2)
• C
  5% (1)
• D
  16% (3)

Explanation

Net premiums written (A) is the standard industry term for gross premiums written minus ceded reinsurance premiums - this subtraction represents the portion of premium the insurer retains after transferring risk to a reinsurer, and it's a core line item in insurance financial statements.

Why the distractors are wrong:

• B (ceded premiums) is what gets subtracted - it's the amount paid to the reinsurer, not the result of the subtraction.
• C (net analyzed premiums) is not a standard financial reporting term; "analyzed" suggests a different type of review process, not a balance sheet line.
• D (earn premiums written) conflates two separate concepts - earned premiums relate to the portion of written premiums applicable to the current period, which is a different adjustment entirely.

Memory tip: Think of it as a simple equation - Gross (total written) minus Ceded (given away) equals Net (what you keep). "Net" always signals the retained amount after reinsurance, just like "net income" is what remains after deductions.

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