Reversion is the right to the enjoyment of money, or of any kind of property, postponed until or contingent on the happening of a given event. Reversions are usually divided into three classes: Absolute Reversion, in which the emergence of the rights is certain, Contingent Reversion, and Reversionary Life Interests. In the first case, when the date of the emergence is also fixed, the value of the reversion is dependent merely upon the operations of interest (see INTEREST). When the date of the emergence of the reversionary right is uncertain, the purchase in an individual case must always be a speculation; but if there are a sufficient number of such rights, postponed to events of which there are sufficient observations from which to deduce laws of average, then the marketable value is easily calculated. For example, it is required to know what is the immediate value of £100 payable certainly on the death of a man aged sixty. Here the value of the reversion is £100, under deduction of the prior life interest, which in this case is the present value of annuity equal to the interest of £100 on the life of a male aged sixty. When an assurance company buys a reversion, it is simply buying that which it sells when it grants a policy of life assurance. In the former case, however, an office, to secure its expenses and profits, will assume a high rate of interest and a long life; in the latter case, for the same reason, it will assume a low rate and a short life. By the Sale of Reversions Act, 1867, no purchase of a reversion is challengeable on the ground of undervalue merely. Where the reversion is contingent, problems arise whose solution requires the utmost skill on the part of the actuary. For instance, B, aged thirty, wishes to borrow £100 on the security of a sum payable to him in the event of his surviving A, aged fifty-eight. Here the security being doubtful, it could only be rendered marketable by assuring a sum to be paid in the event of B dying before A; and there would remain the important question of what this sum should be, so as to cover the loan and the premiums of assurance with yearly accumulations on both. The value of a reversionary life interest is found by deducting the value of a joint life annuity from the value of the annuity on the life of the survivor (see the Institute of Actuaries' text-book, part ii.).
In law a reversion is that right to property which remains after some particular estate has ceased which had been granted by the owner. Thus, if A has a life estate in B's property, and after he dies the property returns to B, B is said to have the reversion or to be the reversioner. The landlord of property let to a tenant is called the reversioner, because the moment the lease determines, the whole of the property and possessions vest in him. In Scots law reversion means the right of redemption retained by a borrower over an estate disposed in security.