Which term describes the company that transfers some of its risk to a reinsurer?

The term that describes the company that transfers some of its risk to a reinsurer is the ceding company. This is because the ceding company is the original insurer that decides to mitigate its own risk exposure by passing on a portion of its underwriting liabilities to a reinsurer.

In the reinsurance arrangement, the ceding company sells a portion of its premiums and the associated risk to the reinsurer, thereby helping to strengthen its financial stability and reduce the potential impact of claims. This transfer allows the ceding company to manage its risk more effectively, ensuring that it can meet its obligations to policyholders.

In contrast, the other terms provided refer to different entities or concepts within the insurance landscape. A reinsurance company is the insurer that accepts the risk from the ceding company, while a captive insurer is a subsidiary created to provide insurance coverage for the risks of its parent company (not involved in transferring risk to a reinsurer). A purchasing group refers to a group of organizations that come together to purchase insurance coverage, often for liability, but does not specifically describe the risk transfer process to a reinsurer.