AAL is the anacronym for Annual Aggregate Limit; in a Non-Proportional Treaty it represents the maximum monetary amount of the claims ceding capacity for a specific Layer.
Each claim payment ceded on a layer “consumes” the available capacity.
If one or more claims or even part of a payment completely uses up the remaining capacity available, the layer reaches its claim limit cap and subsequent claims that are ceded will have no effect on the Reinsurers and the amount ceded will remain as additional retention of the Ceding Company.
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