Explanation: A Ceding Company acts as the primary insurer and transfers part or all of the risks it has underwritten to another insurance company known as the Reinsurer. This process is known as reinsurance, and it allows the Ceding Company to mitigate its risk exposure and share the premium received with the Reinsurer. In return, the Reinsurer assumes a portion of the liability and pays a commission to the Ceding Company for transferring the risk.
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