A form of pro rata reinsurance under which the ceding company cedes that portion of its liability on a given risk which is greater than the portion of risk the cedent retains (i.e., net line), and the premiums and losses are shared in the same proportion as the ceded amount bears to the total limit insured on each risk.

A form of proportional reinsurance where the reinsurer assumes pro-rata responsibility for only that portion of any risk which exceeds the company’s established retentions.

A reinsurance treaty whereby one or more reinsurers agree to accept amounts of Reinsurance, called lines, in a certain range of values over a specified amount (line) retained by the original insurer, the losses being shared proportionately by the original insurer and the reinsurer(s).

The Ceding Company agrees upon a quota share of every risk subject to a limit, so that it retains a part of the quota and cedes the balance to the Reinsurers. Any surplus over and above the quota share limit is ceded as a surplus, which again is subject to an agreed limit. Thus, the two covers are combined under the treaty.

The Ceding Company decides the limit of liability which it wishes to retain on any one risk or class of risk and Reinsurers only those amounts surplus over and above its own net retention. It is generally handled on a pro-rata basis.