Legacy at an inflexion point: shaping the future of risk transfer

Legacy is moving from run-off management to a strategic tool for capital, risk and growth, with Bermuda leading, says Sarah Ruberry, chair at IRLA Bermuda.

Just over two years ago, Insurance and Reinsurance Legacy & Associations (IRLA) Bermuda was established with a clear ambition: to strengthen Bermuda’s position as the global centre for legacy insurance while creating a forum for collaboration between industry participants, regulators and the wider insurance market. Over the past 12 months, we have made marked progress on that ambition as the market evolves and continues to gather momentum.

Earlier this year, IRLA Bermuda reached an important milestone by hosting its inaugural conference under the theme ‘Bermuda and beyond: Shaping the future of retrospective solutions’. Bringing together insurers, reinsurers, brokers, actuaries, lawyers, regulators and other industry leaders, the conference reflected Bermuda’s growing influence within the global legacy market. The attendance of the Premier, the Governor and the Bermuda Monetary Authority (BMA) demonstrated the importance of the sector to the jurisdiction and reinforced Bermuda’s position as a centre of excellence for retrospective risk transfer.

Discussions throughout the conference, and those that followed at the IRLA Congress in Brighton, UK, pointed to a shift within the legacy market. No longer viewed simply as a destination for discontinued business, legacy is increasingly becoming an integral part of insurers’ capital, risk and growth strategies and an innovative solutions provider across the insurance lifecycle.

From run-off to strategic capital management

For many years, retrospective reinsurance was largely viewed as a solution for discontinued business, distressed portfolios or companies exiting particular markets.

That perception is changing. Insurers are increasingly engaging with legacy specialists much earlier in the lifecycle of risk. Rather than wait until portfolios enter run-off, retrospective solutions are now being incorporated into broader strategic decisions around capital allocation, earnings protection, business simplification and growth. Legacy has evolved from managing the past to helping create capacity for the future.

This reflects wider changes across the insurance market. Reserve uncertainty, persistent inflationary pressures, long-tail casualty exposures, increasing capital costs and heightened investor expectations are encouraging insurers to think more dynamically about balance sheet optimisation. 

Legacy solutions have therefore become a strategic tool to support insurers in managing these macroeconomic headwinds, rather than an option of last resort.

Innovation continues to redefine the market

As the market develops, providers continue to innovate to keep pace with legacy’s growing role in supporting the wider insurance ecosystem. Our discussions in Bermuda and Brighton focused less on traditional loss portfolio transfers and more on increasingly sophisticated structures that are reshaping how insurers manage capital and risk.

Innovation is no longer measured simply by the number of transactions completed. Success increasingly depends upon developing flexible solutions that address specific strategic objectives.

Forward exit options, renewable adverse development covers, casualty sidecars, insurance-linked securities partnerships, prospective capital support and other structured solutions demonstrate how the market continues to evolve alongside the needs of insurers and investors. These solutions provide greater flexibility, allow counterparties to engage earlier and create new opportunities for capital efficiency.

Innovation inevitably brings new regulatory considerations. One of Bermuda’s greatest strengths has always been its ability to combine robust supervision by the BMA with a pragmatic, principles-based approach that supports responsible innovation. In this fast-moving environment, continued dialogue between regulators and industry will become even more important. Bermuda’s collaborative approach has played a significant role in establishing the jurisdiction as a global leader in retrospective solutions and will remain critical. Maintaining the right balance between innovation, policyholder protection and market confidence will ensure Bermuda remains well positioned to support the next generation of legacy transactions.

Getting closer to the risk

One theme that resonated throughout both IRLA conferences this year was the increasing proximity of the legacy sector to the live market. Historically, legacy specialists assumed responsibility only after underwriting had ceased. Today, the market is engaging much earlier, working alongside counterparties before exposures become legacy liabilities. 

Legacy providers are applying decades of claims, reserving and capital expertise across a broader range of structures, helping insurers manage uncertainty proactively while providing greater optionality around capital deployment and future exit strategies. Rather than simply transferring liabilities, legacy specialists are increasingly becoming strategic partners throughout the insurance lifecycle.

As relationships become longer term and more strategic, insurers are increasingly seeking partners capable of supporting multiple aspects of risk management – from capital optimisation and reserve protection through to fronting arrangements, alternative capital participation and future exit strategies. This represents a significant evolution in how the industry thinks about retrospective solutions.

Technology is changing how we understand uncertainty

Technology also featured prominently during the Bermuda conference.

Discussions explored the growing role of AI in underwriting, claims management and portfolio analytics, recognising both its significant potential and the importance of appropriate governance, transparency and human oversight. At the same time, advances in data analytics continue to transform how legacy transactions are evaluated.

Competitive advantage increasingly lies in understanding uncertainty – identifying tail risk, interpreting claims behaviour and using increasingly sophisticated analytics to structure transactions more effectively.

While technology is accelerating these capabilities, judgment, experience and specialist claims expertise remain fundamental to successful outcomes.

Bermuda’s opportunity

The outlook for the legacy market remains positive, and Bermuda’s role within that assured. The wider market’s fundamental drivers of demand endure. Reserve uncertainty, capital optimisation, M&A activity, increasing use of alternative capital and greater focus on strategic balance sheet management all reinforce the growing importance of retrospective solutions.

At the same time, the market itself is becoming larger, more sophisticated and increasingly diversified. Legacy providers are expanding their capabilities, investing in technology, developing innovative capital solutions and building deeper, longer-term relationships with counterparties. Bermuda is uniquely positioned to lead this next phase.

Its combination of regulatory credibility, technical expertise, market innovation and concentration of specialist firms creates an ecosystem in which the legacy market can continue to flourish. The discussions at our inaugural conference confirmed the strength of our industry, the positive market outlook and the scale of the opportunity ahead.

As IRLA Bermuda continues to grow, our objective remains unchanged: to promote collaboration, support education, engage constructively with regulators and ensure Bermuda remains at the forefront of the global legacy market.

Sarah Ruberry is chair at IRLA Bermuda and chief compliance officer at Enstar Group. To find out more about IRLA, visit irla-international.com.

For more news on Bermuda Risk Review 2026, click here.

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