Treaty account

A treaty account is the statement the cedant sends the reinsurer at agreed intervals, generally quarterly, recapitulating ceded premium, commissions, paid losses, reserve movements and the net balance payable one way or the other. It is the accounting instrument of the relationship and, on a proportional treaty, the only view the reinsurer has of its business. The problem it solves is the flow of information in a relationship where one party holds all the data: without a standardized periodic statement the reinsurer could neither reserve, nor close, nor manage its retrocession. The quality and timeliness of accounts are therefore a cedant selection criterion as much as its loss experience: a treaty whose accounts arrive nine months late forces the reinsurer to estimate, and therefore to load its margin for uncertainty. Deadline clauses and late payment interest appear in well run treaties, and the move to electronic exchange has cut delays without removing differences of definition.

A reinsurer finds in 2026 that one cedant's accounts arrive on average 147 days after quarter end, against a portfolio median of 62 days. It prices the resulting uncertainty in its own reserving at 0.9 points of premium and charges it at renewal, that is 410,000 euros. The cedant cuts the delay to 70 days the following year and recovers half of that loading.

Treaty account, Compte technique, Reinsurance account, Borderel de compte