Facultative reinsurance is characterized by which of the following?

Facultative reinsurance is indeed characterized by the individual consideration of each exposure for reinsurance. This type of reinsurance allows the ceding company to obtain coverage for a specific risk or set of risks, with the reinsurer evaluating and deciding whether to accept or decline the risk on a case-by-case basis.

This individualized assessment is crucial because it allows the reinsurer to fully understand the particular exposure being offered, thus enabling a more informed decision about the acceptance of that risk. It contrasts with treaty reinsurance, where a blanket agreement exists.

The other options describe aspects that are not applicable to facultative reinsurance. For instance, the notion that the reinsurer accepts all business without review is incorrect, as facultative reinsurance requires that each risk be evaluated before it is accepted. Also, facultative reinsurance does not automatically apply to all policies from a ceding company; rather, it is specific to the risks being presented at any given time. Lastly, facultative reinsurance is not based on a set treaty agreement, as that would imply a more automatic process typical of treaty reinsurance instead of the selective nature of facultative agreements.