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Finite Reinsurance

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Finite Reinsurance
Reinsurance that only covers a limited amount of risk. That is, an insurance company purchases finite reinsurance from a reinsurer to cover certain, very large payouts. The insurance company takes steps to reduce the remainder of its risk in other ways, such as by selling the risk to other parties. Finite reinsurance is available to insurance companies for lower premiums than other forms of reinsurance.


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Garand, former senior vice president and chief underwriter of the company's finite reinsurance operations in the United States, is still awaiting sentencing.
To an industry slowly recovering from a four-year period of intense regulatory scrutiny, the recent federal jury decision to convict five former senior insurance executives of securities fraud in connection with a finite reinsurance deal is yet another black eye, experts say.
The disclosures adopted for the 2005 annual statement require property/casualty insurers to report to state insurance regulators the contract terms and management objectives of any finite reinsurance agreement that has the effect of altering policyholders' surplus by more than 3 percent, or representing more than 3 percent of ceded premium or losses.
 
 
 
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