Treaty Reinsurance: A type of reinsurance contract where one party (the ceding company) agrees to transfer part or all of its risk exposure to a second party (the reinsurer). The terms of the agreement, including the amount of coverage provided and the conditions under which coverage is provided, are set out in a written treaty between the two parties. By spreading their risk across multiple parties, ceding companies can reduce their chances of suffering large financial losses due to unforeseen events.