If a company buys re-insurance from its parent company isn’t it failing to off set any of the liability for the parent company. I don’t see an advantage to the parent company of entering into such an arrangement.
Here’s the article that explains their practice of buying reinsurance from their parent company. It’s under the heading “What’s Fair”
http://www.sptimes.com/2007/07/15/State/Muddy_waters_of_reins.shtml