Insurance Company X has issued $1 billion of hurricane insurance. Management decides to lay-off part of this risk via reinsurance.

Insurance Company X has issued $1 billion of hurricane insurance. Management decides to lay-off part of this risk via reinsurance. They look for companies willing to insure claims above $500 million associated with its current portfolio of hurricane policies. The credit rating of the reinsurance company should not be of any concern to Insurance Company X. This is because insurance companies are well capitalized. (t/f)