ABSTRACT
Under excess of loss reinsurance agreements, a reinsurer is liable for the sum of the reinsured’s ultimate net loss exceeding the latter’s retention up to the policy cover limit. 1 Establishing a schedule of retentions and cover limits for any particular loss allows any participant in the reinsurance market to (re-)insure a greater number of risks and to thereby diversify its risk portfolio so that no disproportionate amount of risk is borne by any one participant. 2
