Uses of reinsurance

Please explain these statements:

"Reduce the cedant's overall contribution to capital requirements by using a reinsurer's capital". "This can result in overall lower capital requirements for the industry and lower reinsurance prices".

 

You must be close to the record of most new threads in a day - good to space them out in future!!

Reinsurers might be required to hold lower levels of extra capital than insurers. SO cost to reinsurer of taking the risk might be lower than insurer hence lower prices.

 

I am a new member and I don't know the record. Please let me know of the record.
How would reinsurer's capital relate to reinsurer's cost?

 

Thanks- I will look at the Online Classroom.

 

Also see this thread: https://www.acted.co.uk/forums/index.php?threads/guidance-on-posting-queries.8779/#post-33197