Multi-year treaty

2026, textbook case: a three year commitment at a fixed 6.8% rate on line, against 6.2% annually, costs 0.6 point more, or 300,000 euros a year on a 50 million limit; in 2028, comparable layers trade at 9.4%. A multi-year treaty commits cedant and reinsurer across several years, with price and terms fixed at signature, sometimes subject to bounded revision clauses. It stands against annual renewal, the dominant practice, which exposes the cedant to the full volatility of the cycle. The problem it solves is uncertainty about the future cost of protection. A cedant pricing its own products three years out cannot afford to see its reinsurance double in price mid-period; a multi-year commitment transfers market risk to the reinsurer on top of technical risk. The reinsurer gets stable income and acquisition costs amortized over several years, which partly offsets the loss of pricing flexibility. The structure is standard on catastrophe notes, where three years with an annual reset has become the norm. It is far rarer in traditional reinsurance, where annuality remains the rule and participants prefer to keep the option of repricing each January.