SOFA-CFE · Question #328
What refers to a reinsurance arrangement which involves a 100 percent cession of a company's block of business at a certain time?
The correct answer is B. portfolio. Portfolio reinsurance describes exactly this scenario - a 100% cession of an entire block of business at a specific point in time, effectively transferring the complete "portfolio" of policies from the ceding company to the reinsurer. Think of it as handing over the whole book…
Question
What refers to a reinsurance arrangement which involves a 100 percent cession of a company’s block of business at a certain time?
Options
- Avariations
- Bportfolio
- Cproportionality
- Dpremium reserves
How the community answered
(29 responses)- A14% (4)
- B76% (22)
- C7% (2)
- D3% (1)
Explanation
Portfolio reinsurance describes exactly this scenario - a 100% cession of an entire block of business at a specific point in time, effectively transferring the complete "portfolio" of policies from the ceding company to the reinsurer. Think of it as handing over the whole book, not just a share of it.
Why the distractors are wrong:
- A. Variations - Not a recognized reinsurance arrangement term; it has no defined meaning in this context.
- C. Proportionality - Relates to proportional vs. non-proportional treaty structures (how losses and premiums are shared), not to a full block transfer.
- D. Premium reserves - A financial/accounting concept representing funds held against future obligations, not a type of reinsurance transaction.
Memory tip: Think "portfolio = the whole portfolio." When a company cedes 100% of a block, it's moving the entire portfolio - the word itself signals completeness and totality.
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