Treaty Facility
Definition of "Treaty facility"
Facility used to gain access to the reinsurance markets by the captive insurance companies for their large property exposures. The facility re-insures a relatively small percentage of its captive company members' property exposure and uses a retro-cession to transfer the remainder of the property exposure on a treaty reinsurance basis. The facility institutes all renewals of reinsurance for its captive company members at the same instance and arranges facultative reinsurance for those members that cannot meet the underwriting requirements of the facility.
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