A reinsurer is a company that provides insurance to insurance companies. When an insurance company sells policies to individuals or businesses, it takes on the risk of potential claims. To manage this risk, the insurer can transfer some of it to a reinsurer, which helps protect the insurer's financial stability. Reinsurers play a crucial role in the insurance industry by allowing insurers to take on larger risks than they could handle alone. This process helps ensure that insurers can pay claims even in catastrophic situations, such as natural disasters, by sharing the financial burden with the reinsurer.