Ceded loss ratio
Ceded losses to ceded premiums ratio, measuring treaty profitability from the reinsurer's perspective.
The ceded loss ratio (ceded losses / ceded premiums) shows how the ceded block performed from the reinsurer's side. A high ratio means the reinsurer has paid out heavily; a low one means the cedant kept the good results. The gap between gross and net loss ratios ties directly to the ceded loss ratio, weighted by the cession rate. The ratio sits at the heart of renewal negotiations: a ceded ratio that stays high year after year justifies a higher premium or less cover. Read it over several years, since a single year of major losses can distort the picture.
Textbook case: 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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