Apex Insurance Company wrote a large number of property insurance poli

Apex Insurance Company wrote a large number of property insurance policies in an area where earthquake losses could occur.

When the president of Apex was asked if she feared that a severe earthquake might put the company out of business, she responded, “Not a chance. We transferred most of that risk to other insurance companies.” An arrangement by which an insurer that initially writes insurance transfers to another insurer part or all of the potential losses associated with such insurance is called
A) hedging.
B) speculating.
C) reinsurance.
D) loss avoidance.

ANSWER

Answer: C