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Funded Cover

Definition of "Funded cover"

Kimberly Gibbs
  Treasure Coast Sotheby's International Realty

Transaction in which the ceding company pays a premium and is guaranteed certain future payments to fund future losses. If losses are less than was expected, the ceding company receives a profit commission. Conversely, if catastrophic losses are occurring at a faster rate than the investment return earned on the premium, the ceding company will not receive its full recovery on its reinsurance.

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