What options do re-insurers have regarding the risks they take on?

Reinsurers play a crucial role in the insurance market by helping primary insurers manage risks and stabilize their financial positions. The correct option highlights that reinsurers have the flexibility to either decline a risk they deem unmanageable or accept a portion of the risk, allowing them to control their exposure to potentially large losses.

This method of risk management is essential for reinsurers as it allows them to analyze each risk on its own merits, considering factors such as the underwriting guidelines, pricing adequacy, and the overall risk profile of the primary insurer. By sharing or declining risk, reinsurers ensure they maintain a balance in their portfolio, achieving both profitability and sustainability.

The other options presented do not accurately reflect the operations and strategies of reinsurers. Accepting every risk without evaluation would be imprudent, as it could lead to significant financial strain. Swiftly transferring all risks to primary insurers implies a lack of engagement in the risk management process, which is not how reinsurance typically operates. Additionally, managing only investments neglects the primary role of reinsurers in risk assessment and management.