a contract for reinsurance whereby the ceding company may cede risks of any agreed class which the reinsurer must accept if ceded
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Fac-oblig’ allows the cedant to select the risks he offers to the reinsurer who must then accept all cessions within the treaty. It is normally arranged after a surplus treaty and provides automatic facultative cover for the cedant when the surplus treaty capacity is full. It differs from a second surplus treaty only in that the cedant has a choice.