> For the complete documentation index, see [llms.txt](https://docs.re.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.re.xyz/getting-started-with-re/how-re-works.md). # How Re works
How Re Protocol works
A reinsurer must prove to regulators and insurers that it can pay claims even in extreme cases. It does that by holding assets against each agreement. Those assets are called **collateral**. ## Re Protocol and Cover Re SPC Ltd. It's worth noting that **Re is not itself a reinsurer**. Re is a DeFi protocol that sources capital from the DeFi markets to provide the collateral that backs reinsurance contracts. Cover Re SPC Ltd. is a reinsurer licensed and based in the Cayman Islands. It acts in partnership with Re. When Re users deposit funds with Re, they are providing the collateral with which Cover Re SPC Ltd. can deploy new reinsurance policies. **To sum up:** Re is the DeFi layer through which depositors provide capital. Cover Re SPC Ltd. deploys that capital as collateral for real-world reinsurance contracts, from which depositors earn yield backed by real-world reinsurance premiums and other protocol-derived sources.\ \ Though Cover Re SPC Ltd. is currently Re's sole reinsurance partner, the protocol plans to eventually expand capital availability to all interested reinsurers. *** *For educational and informational purposes only. Nothing on this Site is investment, financial, legal, or tax advice, or an offer, solicitation, or recommendation to buy, sell, or hold any digital asset, including reUSD and reUSDe. Yields are not guaranteed and all figures are illustrative, not a promise of return; past performance is not a reliable indicator of future results. Digital assets involve significant risk, including total loss of principal — the Tokens are not bank deposits and are not insured by any government agency. The Tokens are available only to eligible non-U.S. persons in permitted jurisdictions and are subject to KYC/AML requirements. The binding terms of the applicable agreements govern and prevail over this summary. See our full* [*Disclosures*](https://re.xyz/disclosure) *for important additional information.* *Cover Re SPC is unaffiliated with Resilience Foundation. The protocol governs token issuance and capital routing. The reinsurer operates independently under CIMA oversight.*