Reinsurance is defined in our key terms section as:
Reinsurance – The transfer of some or all of am insurance risk to another insurer. The company transferring the risk is the ceding company, and the company receiving the risk is the reinsurer.

The following diagram shows how a captive participating in a 3rd party risk pool that cedes risk, reinsures risk, to the captive:

Captive Risk Pooling - Captive Insurance Company Reinsurance Pool Structure Diagram - Thomas Tom Cifelli, Captive Experts