Page 53 - Reinsurance Management IC85

The Insurance Times

of obligations and is usually considered as
representing the unearned portion of the premium
ceded. The clause covers :-

i. the percentage of premium to be retained;
ii. when and how the premium is to be retained

and when released;
iii. interest payable on reserve retained; and
iv. how the reserve is to be treated if the treaty

is terminated,

b. The various methods of valuation of portfolios
are:
i. To determine pro rata premium applicable
to the unexpired portion of each cession,
total the same to get gross portfolio and
adjust for reinsurance commission. This
method is known as "pro rata temporis"
method.

ii. 50% method: Under this method, it is
assumed that on an average 50% of
premiums are unexpired at the end of the

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