If a company wants to withdraw a particular line of business from the market, they can cede or offload 100% of their business to a reinsurer so their net reserves would go to 0 immediately. There would be a cost to purchase the reinsurance policy but they would no longer be subject to financial volatility in loss results. This would also immediately free up surplus since it no longer has to support potential losses.
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If a company wants to withdraw a particular line of business from the market, they can cede or offload 100% of their business to a reinsurer so their net reserves would go to 0 immediately. There would be a cost to purchase the reinsurance policy but they would no longer be subject to financial volatility in loss results. This would also immediately free up surplus since it no longer has to support potential losses.
thats very clear, thank you!
I'm going to link to your post from the wiki. Thanks for asking the question!