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The procedure used by insurance companies to reduce the risks associated with underwritten policies by spreading risks across alternative institutions, portioning out pieces of a larger potential obligation in exchange for some of the money the original insurer received to accept the obligation. The party that diversifies its insurance portfolio is known as the ceding party. The party that accepts a portion of the potential obligation in exchange for a share of the insurance premium is known as the reinsurer. Also known as "insurance for insurers" or "stop-loss insurance".

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