Ceded losses to ceded premiums ratio, measuring treaty profitability from the reinsurer's perspective.
The ceded loss ratio (ceded losses / ceded premiums) represents the ceded block's performance as seen by the reinsurer. A high ratio means the reinsurer has been heavily triggered; a low ratio means the cedant has kept profits. The gross/net ratio gap is directly linked to the ceded loss ratio weighted by the cession rate. Central in renewal negotiations: a chronically high ceded ratio justifies a premium increase or coverage reduction. Multi-year analysis is essential as a single major loss year can distort the picture.
40% QS treaty: ceded losses 1,800K EUR / ceded premiums 2,500K EUR = 72% ceded loss ratio, slightly below the 75% gross ratio.
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