Prudential Reinsurance Co. v. Superior Court

Opinion

LUCAS, C. J.

Insurance Code section 620 (all further statutory references are to this code unless otherwise stated) defines a reinsurance contract as “one by which an insurer procures a third person to insure him against loss or liability by reason of such original insurance.” Typically, under a reinsurance contract, the primary insurer “cedes” a portion of the premiums for its policies, and the losses on those policies, to the reinsurer.

In a reinsurance transaction, policyholders pay premiums to their original insurer, who, in turn, pays a reinsurer a percentage of the initial premiums…