Glossary

Reinsurance

Insurance that insurance companies buy, passing part of the risk on policies they've sold to another company called a reinsurer.

Also called: reinsurer, ceded reinsurance

Reinsurance is how a life insurer (the ceding company) shares risk with another insurer (the reinsurer). The ceding company keeps its contract with you, collects your premium and pays your claim. Behind the scenes, the reinsurer reimburses it for an agreed share of losses in exchange for a share of premiums.

Life insurers use it for several reasons: to cap exposure on any one life above their retention limit, to smooth results, to free up capital and reserves, and to tap the reinsurer's underwriting expertise. Common forms include yearly renewable term reinsurance, which covers only the net amount at risk, and coinsurance, which shares premiums, reserves and investment risk proportionally. Hypothetically, an insurer that issues a $10 million policy with a $2 million retention cedes the other $8 million to one or more reinsurers.

Policyholders rarely see reinsurance, and it doesn't change their rights: if a reinsurer fails, the direct insurer still owes the claim. It draws scrutiny when insurers, often private equity-backed, move large blocks of annuities to affiliated or offshore reinsurers that operate under different capital rules. See reinsurance: the insurers behind your insurer and Offshore reinsurance and Bermuda: why it matters to policyholders.

Last reviewed October 4, 2026

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Related terms

Retention limit The most an insurer will keep at risk on a single life before passing the excess to reinsurers. Net amount at risk The part of a death benefit the insurer would pay from its own funds: the total death benefit minus the policy's cash value or reserve. Reserves Liabilities a life insurer must hold on its balance sheet, as required by state law, to cover future claims and benefits owed on policies in force. Statutory accounting The conservative accounting rules state regulators require insurers to use in filings, built to show whether a company can pay its policyholders. Mortality rate The share of people of a given age expected to die within a year, often shown as deaths per 1,000; it is the foundation of life insurance pricing.

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Related insurers

American National Texas insurer founded in 1905, owned by Brookfield since 2022; it stopped selling most new life policies in 2025 and now focuses on annuities. Athene Apollo-owned retirement company in West Des Moines, Iowa; a top U.S. annuity seller that no longer sells life insurance but still services older life blocks. Corebridge Financial AIG's former life and retirement arm, issuing policies as American General Life; now independent and set to merge with Equitable Holdings by end of 2026. Empower (formerly Great-West Financial) Empower, once Great-West Financial, is a retirement plan giant that stopped selling life insurance in 2019; Protective now services its old life policies. Everlake Life The former Allstate Life Insurance Company, sold to Blackstone funds in 2021. It services about 1.5 million Allstate-era policies and sells no new ones. Farmers Life The life insurance arm of the Farmers Insurance group, issued by Zurich-owned Farmers New World Life and sold through Farmers agents and online in 49 states.

Related annuity companies

American Equity and American National Brookfield Wealth Solutions' annuity group: American Equity and Eagle Life fixed index annuities and American National MYGAs, sold through agents and online. F&G Annuities & Life Des Moines annuity specialist about 70% owned by Fidelity National Financial, selling fixed indexed annuities, MYGAs and a RILA through agents. Global Atlantic KKR-owned annuity group whose Forethought Life sells fixed, fixed index, RILA, variable and income annuities through banks and broker-dealers. Jackson National A Lansing, Michigan, annuity specialist owned by NYSE-listed Jackson Financial, known for variable annuities and also selling RILAs and fixed index annuities. Lincoln Financial Public insurer (NYSE: LNC) selling variable annuities, Level Advantage RILAs, fixed indexed annuities and a MYGA through financial professionals. Sammons Financial (Midland National and North American) Employee-owned group whose Midland National and North American units sell fixed index annuities, MYGAs and RILAs through agents, banks and advisers.