A reinsurance book dating back five decades has moved from Brazil's largest reinsurer to a UK run-off specialist.
The High Court sanctioned the transfer of the entire UK branch business of IRB-Brasil Resseguros to Community Reinsurance Corporation Limited at a hearing on June 16, 2026, with written reasons published on September 9. The transfer was carried out under Part VII of the Financial Services and Markets Act 2000, the statutory mechanism that allows insurance portfolios to be moved between carriers with court approval.
IRB-Brasil Resseguros, founded in 1939 and publicly listed in Brazil, is the country's largest reinsurer. Its UK branch operated in the London market for roughly a decade, writing general reinsurance contracts - mainly marine, aviation, property and casualty - between 1974 and 1983 through Lloyd's-accredited brokers. The branch suspended underwriting in December 1982 and has been in run-off ever since.
The receiving entity, Community Reinsurance Corporation, is a UK-registered insurer that has itself been in run-off since 1984. It was acquired by the Carrick Group in 2020 and is now part of a Bermuda-based group specialising in non-life legacy insurance and run-off solutions. The Carrick Group was in turn acquired in January 2024 by Northlight QIAIF, an Irish-regulated entity managed by London-based investment manager Northlight Group LLP.
The portfolio comprised approximately 38,066 policies across 830 policyholders. As at December 31, 2023, there were 2,298 claims outstanding under around 173 of those policies, with gross and net claims reserves - including incurred but not reported claims - of approximately US$32.84 million before accounting for a loss portfolio transfer reinsurance agreement already in place.
That agreement, between IRB and Carrick Re Limited, a Bermuda-based reinsurer within the Carrick Group, meant the economic risk of the book had already shifted. The Part VII transfer was designed to align the legal liability to policyholders with the economic reality - putting the legal obligations where the money already sat.
Around 78% of the policies are governed by US law, with roughly 20% under UK law. A US lawyer provided an opinion that American courts would likely recognise and enforce the scheme, meaning claims against IRB that transferred under it should be pursued against Community Reinsurance going forward.
The transfer will allow IRB to deauthorise and close its UK branch.
TIG Insurance Company was the only party to formally object. Its solicitors raised three principal concerns: a discrepancy between the independent expert's reserve figures and TIG's own outstanding claims; a risk that Community Reinsurance's limited capital would prove inadequate over the long-tail exposure period; and a deterioration in service standards since the Carrick Group took on the economic risk and day-to-day management of the book.
Some or all of those concerns, the judgment noted, stemmed from the perception that the book was moving from the UK branch of a very large overseas reinsurer to a transferee with a significantly smaller balance sheet.
TIG commissioned an analysis from FTI Consulting, which questioned whether enough data existed to estimate liabilities reliably and highlighted the difficulty of reserving for asbestos exposure in the portfolio.
The independent expert, appointed with the approval of both the PRA and FCA, addressed each point in an update to his supplementary report. On the data question, he said the level of information available was typical for a portfolio written five to six decades ago and that the absence of granular data did not prevent deriving a reasonable estimate of liabilities. On asbestos reserving, he acknowledged the inherent uncertainties but noted that actuaries regularly estimate asbestos liabilities using established techniques, even where underlying data is incomplete - and that these challenges apply to any portfolio with historic US asbestos exposure, particularly at the reinsurance level where carriers are further removed from claim-level information.
On one specific large loss that FTI had queried, the independent expert said it was precisely this kind of uncertainty that had led him to stress-test scenarios in which Community Reinsurance's reserves deteriorated significantly after the transfer. His stress tests, he said, contemplated scenarios significantly more severe than those in FTI's critique.
As for service standards, a witness for TIG had raised a dispute over claims handling following implementation of the loss portfolio transfer agreement. The independent expert noted this related to a specific large loss already subject to arbitration and concluded that no information he had received changed his earlier assessment of service levels.
In the period between the adjournment and the rescheduled hearing, IRB and TIG resolved their outstanding disputes. TIG withdrew its objection.
A commitment deed between Carrick Group Limited, its UK subsidiary and Community Reinsurance provides the transferee with access to up to US$10 million in additional capital in the event of an adverse development or solvency deterioration. The independent expert considered this legally enforceable and, if anything, beneficial to policyholders.
Neither the PRA nor the FCA objected. The FCA confirmed in its second report that the scheme fell within the range of fair and reasonable schemes available to the parties. The PRA was satisfied on solvency grounds and noted no reason to object.
A minor complication arose from three policyholders subject to UK sanctions. Two were already existing policyholders of Community Reinsurance. The third was excluded from the scheme, meaning the transfer no longer covered the whole of IRB's UK branch book - but this did not affect the court's analysis.
The judgment reviewed the established legal framework for Part VII transfers, drawing on Court of Appeal guidance and recent High Court authority. The central test is whether the transfer would have a material adverse effect on policyholders - not a theoretical one, but a real and significant risk to their position.
The court found the independent expert's reports and the regulators' assessments clear, cogent and convincing, and saw no reason to depart from their conclusions. Service standards and corporate governance would not be adversely affected. The scheme was sanctioned, along with ancillary orders.
For run-off practitioners and claims teams dealing with long-tail London market business, the case illustrates both the mechanics and the friction of moving a small legacy book through the Part VII process - a point the Carrick Group's chief operating officer has publicly raised, calling for a more proportionate approach to transfers involving smaller balance sheets.
