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The Cover Slip / Keep or transfer
The retention line
Keep or transfer
The decision is not whether a risk is large. It is whether the promoter can pay the prize out of the margin the promoted product already makes, in the month the prize falls due - and the line that answers it is the retention.
Slip stub
- Retention rule
- 10% of one month’s gross win on the promoted market
- Gross win a month
- 420,000.00 on the sample promoted market
- Retention
- 42,000.00
- Sample prize
- 1,000,000.00, or 23.8 times the retention
- Golf-day prize
- 25,000.00, or 3.1 times a small promoter’s 8,000.00
the perilOne stated act that must happen for the prize to be owed - and the estimate of how often it has
the retentionThe largest prize the promoter funds from the promoted product’s own margin, before any cover responds
the coverA schedule of twelve fields that indemnifies the promoter, and is never a reader’s protection
Desk The Cover Slip, cycle 62 · Page the retention and the decision rule · Rule self-fund up to the retention, transfer everything above it · Sample line 42,000.00 for the large promoter, 8,000.00 for the small one · Consequence a 1,000,000.00 prize is transferred; a 500,000.00 meter is not
Direct answer A retention is the largest prize a promoter is willing to fund from its own margin. Below the line the risk is kept, because paying it would be painful but survivable; above the line it is transferred, because the prize is a multiple of what the promoted product earns in the month it falls due.
The line, and why it is a percentage rather than a number
01The retention is measured against a month, not against a year
A prize falls due on a date. The test is whether the promoter can pay it out of the ordinary margin of the business on and around that date, so the natural denominator is one month’s gross win on the market the promotion is attached to, not the group’s annual revenue.
The sample rule sets the line at 10% of that month. With 420,000.00 of monthly gross win on the promoted market, the retention is 42,000.00.
02A prize at 23.8 times the retention is transferred
The sample promotion promises 1,000,000.00 against a 42,000.00 retention. Paying it from the product’s own margin would consume about two and a half years of the promoted market’s gross win at that rate, which is the arithmetic behind the decision rather than any statement about the size of the company.
03The same rule produces the opposite answer for a small promoter
A golf day promising 25,000.00, run by a promoter whose retention is 8,000.00, is at 3.1 times its line and so is transferred. The prize is forty times smaller than the seasonal one and it is still insured, because the line moved with the business rather than with the prize.
04Some exposures are never transferred at all
A prize funded by a slice of every qualifying stake is a third case. It is not carried and it is not insured: it is funded by the turnover that creates it, so the liability and the money arrive together. The guaranteed prize on this desk’s own page is that case, and it is the reason a promoter can publish a guarantee without buying anything.
The same prize, three promotersprize retention prize / retention decision
1,000,000.00 420,000.00 x10 = 42,000.00 23.8 transferred
25,000.00 80,000.00 x10 = 8,000.00 3.1 transferred
500,000.00 funded at 1.0% of 52,000,000 of stakes kept (funded inside the product)
and the check on the first line:
months of gross win to pay it from the product = 1,000,000.00 / 420,000.00 = 2.4
A retention is a commercial choice, not a regulatory one. Nothing in the promotion has to disclose it, and on this desk’s sample book none of the twelve policy fields appears in the promotion a reader sees. The retention explains the promoter’s behaviour; it does not change the reader’s rights.
kept: 42,000.00transferred: above the line23.8 x retention10% of one month’s gross win