Pronunciation: [ɹˌɛtɹə͡ʊsˈɛʃən] (IPA) 
The word "retrocession" (/ˌrɛtrəˈsɛʃən/) refers to the act of returning something to its previous owner, or the act of ceding something back to its original owner. The word is spelled with the prefix "retro-" which means "backwards" or "back" and the root word "cession" which means "the act of surrendering something". The pronunciation of "retrocession" includes stress on the third syllable and the sound /ʃ/ at the end.
Retrocession is a term used primarily in the field of insurance and reinsurance to refer to the act of one insurance or reinsurance company transferring all or a part of the insurance policies it has underwritten to another company. Essentially, retrocession involves the ceding of risks and liabilities by one insurer to another, typically to spread risk, reduce exposure, or comply with regulatory requirements.
In retrocession, the original insurer, also known as the cedent, transfers the policies to a second insurer, referred to as the retrocessionaire, in exchange for a payment or premium. This allows the cedent to lessen its financial burden or decrease its exposure to potential losses in case of a catastrophic event. Retrocession can be a strategic move for insurers to manage their risk and enhance their capital adequacy.
The retrocessionaire assumes the liabilities and risks associated with the policies transferred to them, and they receive premiums and potential profits from the policies. Retrocessionaires often operate on a global scale, participating in various reinsurance transactions across different countries and regions. This allows them to diversify their risk and share potential losses with other insurers.
Retrocession plays a crucial role in the reinsurance market and contributes to its stability and efficiency. It enables insurers to effectively manage their risk portfolios, maintain solvency, and protect policyholders' interests. Moreover, retrocession helps to facilitate the smooth functioning of the insurance industry as a whole by promoting risk-sharing and financial stability among insurers.
1. A going back, a relapse. 2. The cessation of the external symptoms of a disease followed by signs of involvement of some internal organ or part.
A practical medical dictionary. By Stedman, Thomas Lathrop. Published 1920.
The act of retroceding; a moving backwards.
Etymological and pronouncing dictionary of the English language. By Stormonth, James, Phelp, P. H. Published 1874.
The word "retrocession" originates from the Latin prefix "retro-" meaning "back" or "backward", and the verb "cedere" meaning "to yield" or "to give up". The Latin term "retrocedere" means "to go back" or "to recede".
The term was first adopted into the English language in the mid-19th century, primarily in political and territorial discussions. It refers to the act of returning or giving back previously ceded territory or sovereignty to its original owner or to a third party. The word "retrocession" is primarily used to describe the political process of transferring sovereignty or returning land, rather than territorial annexation or expansion.
