In terms of reinsurance, what does a company usually seek from a retrocession?

In the context of reinsurance, a retrocession occurs when a reinsurer transfers some of the risk it has assumed from the primary insurer to another reinsurer, known as a retrocessionaire. This practice serves a fundamental purpose: managing risk exposure.

When a company seeks a retrocession, it typically aims to further limit its reinsured risks. By ceding some of its risk to another reinsurer, the primary reinsurer can achieve better capital management, reduce volatility in its financial results, and enhance its capability to underwrite newer risks. This transfer of risk is essentially a strategy to create a more balanced and less exposed portfolio, which can be crucial, especially in unpredictable insurance markets.

While outsourcing liability, enhancing premium income, or seeking additional risks might seem related to the operations of insurance and reinsurance, they do not encapsulate the main goal of obtaining retrocession. The focus with retrocession is primarily on risk management and prevention of over-exposure, reinforcing why limiting its reinsured risks is the primary objective in this context.