Cedant

What is a Cedant?

In the reinsurance market, the cedant (also called the ceding company or cedent) is the primary insurance company that has issued policies to policyholders and subsequently transfers a defined share of the associated risk to a reinsurer. The cedant sits at the centre of the insurance chain: it faces the policyholder directly, assumes the full legal obligation to pay covered claims, and then purchases reinsurance to limit its net financial exposure. When a claim is paid, the cedant pays the policyholder in full and recovers its contractual reinsurance share from the reinsurer.

The term "cedant" derives from the Latin cedere — to yield or transfer. In practice, the cedant cedes both a share of the premium it has collected and, in the event of a loss, a corresponding share of the loss payment. The reinsurance agreement defines precisely which risks are ceded, what percentage or layer of losses the reinsurer covers, and what premium the cedant pays for this protection.

The Cedant's Obligations Under a Reinsurance Treaty

Cedants carry significant ongoing obligations under their reinsurance arrangements. They must report ceded business accurately and promptly through bordereau statements — detailed schedules listing every policy ceded, the corresponding premium, and any losses attaching to ceded risks. Loss advices must be sent to reinsurers when individual claims reach agreed reporting thresholds. The cedant is also typically required to manage claims in good faith under the "follow the fortunes" principle, making claims decisions that a reasonable insurer would make irrespective of whether reinsurance is in place.

Failure to comply with reporting obligations — late bordereau submissions, failure to notify large losses within required timeframes, inaccurate cession data — can give reinsurers grounds to dispute recoveries or, in serious cases, challenge the cedant's compliance with treaty terms. Cedants with multiple reinsurance treaties across different classes must manage these obligations systematically, as the aggregate reporting burden across a diverse book can be substantial.

Cedant vs. Retrocedant

The term "cedant" specifically refers to a primary insurer ceding to a reinsurer. When a reinsurer subsequently purchases its own reinsurance (retrocession), the reinsurer in that transaction is called the retrocedant rather than a cedant — reflecting its position as a professional risk-bearing entity rather than a primary insurer. However, the economic dynamics are identical: the retrocedant cedes premium and loss exposure to the retrocessionaire in the same way a cedant cedes to a reinsurer.

Cedant Reporting and Data Quality

The quality of data flowing from the cedant to the reinsurer is a critical determinant of the long-term reinsurance relationship. Reinsurers price renewals based on actual loss experience reported by cedants; if the data is incomplete, inconsistently formatted, or delayed, the reinsurer cannot accurately assess portfolio performance. Consistently high-quality reporting — accurate policy details, timely loss advices, properly reconciled bordereaux — positions the cedant for competitive pricing and strong reinsurer support at renewal.