Defined terms for the annuity market and lifetime income landscape.
A captive reinsurer is a reinsurance company owned by — or affiliated with — the same corporate group as the insurance carrier ceding business to it, used to retain reinsurance economics within the group rather than transferring them to a third party.
Coinsurance, in the reinsurance context, is a full-risk-transfer structure in which the reinsurer assumes a defined share of the policies in a block as if it had written them, taking a corresponding share of premium, claims, reserves, and supporting assets.
Company action level is the first regulatory intervention threshold under the US risk-based capital framework, triggered when an insurance carrier's risk-based capital ratio falls below two hundred percent and requiring a corrective action plan submitted to the state insurance commissioner.
Deferred acquisition cost (DAC) is the GAAP balance-sheet asset created when an insurance carrier capitalizes the costs of acquiring new business — commissions, underwriting, issue expenses — rather than expensing them, with the asset amortized against the revenue stream over the contract life.
A downstream insurance subsidiary is the regulated insurance entity owned by an insurance holding company that issues insurance contracts, holds the assets backing them, and is licensed and capitalized at the state level — the entity against which the contract owner actually holds the claim.
