cedant

A cedant is a party in an insurance or reinsurance contract that transfers risk to another party. In the context of insurance, the cedant is the original insurance company that has underwritten a policy or a portfolio of policies and wishes to reduce its exposure to potential claims. This transfer of risk is typically accomplished through a reinsurance agreement. The cedant pays a premium to the reinsurer in exchange for the reinsurer assuming a portion of the risk. This allows the cedant to manage its capital more effectively, protect itself against catastrophic losses, and increase its underwriting capacity.

In a facultative reinsurance arrangement, the cedant offers specific risks to a reinsurer, who then decides whether to accept or reject each individual risk. In a treaty reinsurance arrangement, the cedant agrees to cede a defined portion of a class or classes of business to the reinsurer, and the reinsurer is obligated to accept that business within the terms of the treaty. The cedant remains the primary insurer in its relationship with the original policyholder, while the reinsurer acts as an insurer to the cedant. The term "cedant" is derived from the Latin word "cedere," meaning to yield or to give up.