financial quota share
A form of reinsurance that enables a cedent to increase its statutory surplus
by the amount of the ceding commission in the reinsured unearned premium reserve.
Surplus relief arises because statutory accounting requires insurers and reinsurers
to immediately charge all acquisition costs to the accounting period in which
the business is written, even when the premium is unearned at the end of the
period. It is referred to as prepaid acquisition costs in the unearned premium
reserve, or the equity in the unearned premium reserve.