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In a reinsurance agreement, it is the ceding company that transfers its loss exposure. The ceding company, often referred to as the primary insurer, is the original insurer that has the responsibility of coverage for policyholders. To manage its risk and protect against potential large losses, the ceding company enters into a reinsurance agreement with a reinsurer.

By ceding a portion of its risk to the reinsurer, the ceding company effectively reduces its exposure to losses resulting from claims. This allows the primary insurer to stabilize its loss experience, enhance its capacity to underwrite more policies, and maintain solvency. The reinsurer assumes the transferred risk in exchange for a premium and in return is responsible for some or all of the losses that exceed the ceding company's limits.

Thus, the primary insurer's role in a reinsurance agreement is crucial because it enables them to effectively manage and mitigate their risk by transferring loss exposure to another entity.