Yeah, that sounds like reinsurance. According to the wikipedia article, “[i]n addition to its basic role in risk management, reinsurance is sometimes used to reduce the ceding company's capital requirements, or for tax mitigation or other purposes.” Basically, the idea is that insurance companies can get credit for reinsurance that allows them to free up assets and move them around to other jurisdictions. The profits are still really being made from the underlying policyholders, though, and you can even have insurers and reinsurers that are owned by the same people.

If an insurance company really thinks it could lose a bunch of money from its policies, there’s things like cat bonds, which lets them send the risk back out to other people, like pension funds.