What is retention ratio?
The retention ratio (also known as the net income retention ratio) is the ratio of a company’s retained income to its net income. The retention ratio measures the percentage of a company’s profits that are reinvested into the company in some way, rather than being paid out to investors as dividends.
What is retention in insurance?
The insurance definition of retention is synonymous with this. Retention as applied to Reinsurance; “Is the amount of risk that the reinsured (Cedant) is willing to pay out of its own account for any policy, risk or group of risks. The Portion of risk that is written and not ceded away to the reinsurer”
How do you calculate reinsurance retention ratio?
Reinsurance retention ratio. The reinsurance retention ratio is: net premium written ÷gross premium written. It is a rough measure of how much of the risk is being carried by an insurer rather than being passed to reinsurers.