When a reinsurer seeks to transfer some of its risk to other reinsurers, the risk placed in this way is called a:

The term "retrocession" refers to the process whereby a reinsurer transfers some of the risk it has assumed to another reinsurer. This is a common practice within the reinsurance industry, allowing reinsurers to manage their risk exposure more effectively by spreading it across additional parties. By doing this, the initial reinsurer (often referred to as the retrocedent) can lessen its liability and financial burden associated with large or high-risk policies.

Understanding this concept is crucial as it reflects the layered nature of risk management in insurance. In a retrocession, the reinsurer is effectively acting as the cedant (the party transferring risk in a reinsurance agreement) in the transaction with another reinsurer. This helps to create stability within the reinsurance market, allowing reinsurers to maintain adequate capital reserves while still underwriting large amounts of risk.

The other terms refer to different roles or arrangements in the insurance and reinsurance process. The term "reinsured" typically describes the original insurance company that transfers risk to the reinsurer. "Treaty" refers to an agreement or contract outlining the terms under which reinsurance is provided but does not denote the actual act of transferring risk. Lastly, "cedant" identifies a party that transfers risks to a reinsurer,