With insurers facing increasing pressure to deploy capital efficiently and a growing pool of third-party capital entering the sector, the legacy market is undergoing a shift in how it is perceived and used. According to David Quinn (pictured), Managing Director – Underwriting at Compre Group, reserve risk transfer is increasingly being discussed as part of capital planning rather than as a response to balance-sheet pressure.
For much of its history, the legacy market was associated with insurers disposing of unwanted liabilities and drawing a line under past exposures. Quinn argued that perception no longer reflects how many firms are approaching reserve risk today.
"Legacy comes with a lot of connotations, it feels like it's the past and it's a cleanup exercise," he told Insurance Business UK. "But it's really just reinsurance on your reserve risk. And that can come in many shapes and forms."
The distinction matters because it broadens the role legacy solutions can play. Rather than being reserved for discontinued books or problematic exposures, reserve risk transfer is increasingly being considered alongside wider discussions about capital allocation, earnings stability and growth.
For much of the market's development, legacy transactions were largely transactional. An insurer transferred unwanted reserves, achieved greater certainty over its liabilities and moved on.
Quinn said those conversations have become more strategic. Clients are increasingly focused on how reserve risk transfer can free capital, reduce earnings volatility and create greater flexibility in how resources are deployed.
"Now it's much more: what we can do is help you optimise your capital, give you stability in your earnings, and help you accelerate that capital through your business," he said. "You can put it into new growth areas or return it to shareholders more quickly, and we can do that on a recurring basis."
That shift is also changing expectations around the relationship between insurers and counterparties. Rather than viewing reserve risk transactions as a final step after underwriting has finished, some firms are looking at solutions that can support risks throughout their lifecycle.
"We can take a small line at the front end and 100% of it as it develops and matures," Quinn said. "Clients like that. It goes more towards what traditional reinsurance does, we're going to be in a relationship for a number of years."
According to PwC's 2025 Global Insurance Run-Off Survey, global non-life run-off reserves exceed US$1.1 trillion. PwC also identified 33 publicly disclosed non-life run-off transactions in 2024 involving an estimated US$6.6 billion of gross liabilities transferred.
Quinn identified three factors contributing to increased interest in reserve risk transfer.
The first is the market cycle. Continued inflows of both traditional and alternative capital are increasing pressure on insurers to deploy capital efficiently and assess whether reserves are generating an appropriate return relative to the capital they consume.
The second is performance within individual lines of business. Periods of adverse claims development or concerns over rate adequacy have historically driven demand for reserve risk solutions, and Quinn said certain classes are experiencing precisely those pressures today.
The third driver is the growing role of institutional investors in insurance structures such as managing general agents, insurance-linked securities vehicles and sidecars. While investors often value insurance risk for its diversification benefits, long-tail liabilities can sit less comfortably with investment horizons.
"They like the diversification of insurance risk but they don't necessarily like the tail, which is always longer than maybe they've been sold," Quinn said.
What Quinn found particularly notable was the timing of those discussions. Rather than addressing tail risk after capital has been committed, some investors are now considering reserve risk solutions before entering a transaction.
"We don't see that going away," he said. "There's a lot more third-party capital coming into the space, and actually coming in now with that tail risk solution already in mind."
Rising merger and acquisition activity is creating another avenue for demand. Buyers assessing insurance businesses frequently focus on legacy liabilities, making reserve risk transfer one potential mechanism for simplifying balance sheets ahead of a transaction.
Quinn also pointed to a misconception that he believes still limits engagement with the market. Some insurers assume reserve risk transactions require them to relinquish claims handling responsibilities and direct relationships with policyholders.
"Clients can still be the one who interfaces with their policyholders and manages the claims. You don't need this whole operational transfer," he said. "I think traditionally that may have held some insurers back from engaging with the market."
The patterns observed suggest legacy solutions are being discussed earlier and in a broader range of circumstances than in the past. Quinn's view is that reserve risk transfer is increasingly being considered before a balance-sheet issue emerges, particularly among investors and insurers looking to build greater flexibility into their capital structures.
Whether that shift becomes widespread remains to be seen. But the conversations, he said, are already moving beyond the traditional notion of legacy as a tool for cleaning up the past.
