The traditional and retrospective reinsurance markets are entering a new stage of maturity, driven by growing demands for capital optimization, operational efficiencies and increasingly complex transaction structures.
This was the core message at this year’s IRLA Conference and Business Symposium, where industry leaders said the industry is no longer simply responding to distressed or discontinued operations, but is increasingly acting as a strategic partner to reinsurers/insurers in dealing with reserve fluctuations, soft market conditions and long-term capital planning.
IRLA Chairman Kevin Gill opened the conference by outlining four themes impacting the market: continued development, innovation in transaction structures, continued demand for core traceability solutions and an increasing focus on operational efficiency.
Rebecca Wilkinson, director at PwC UK; Jamie Saunders, chief underwriting officer, RiverStone International; Dan Sanford, managing director of mergers and acquisitions, Enstar Group; Simon Hawkins, group chief operating officer, Compre Group; James Dickerson, head of retrospective reinsurance and legacy solutions at Lockton Re.
Steve Ryland, Managing Director, ARCAS London and Global Head of Retrospective Solutions at Acrisure Re; Tom Booth, CEO, DARAG Group; Hannah Farrer Fisher, Director, Quest Group; and Jonathan Drake, Partner, DWF, share perspectives on how the market is adapting to the new needs of insurers and reinsurers globally.
A key focus throughout the discussion was the scale of opportunity still available to the industry. Wilkinson noted that the global runoff market is currently estimated to be worth more than $1.1 trillion, while stressing that the market is still relatively young compared with the broader insurance industry.
She noted that deal activity will be strong from late 2025 to early 2026, with increasing diversity in jurisdictions including Australia, Canada and continental Europe. Despite consolidation among vendors, she suggested the market continues to demonstrate resilience through operational discipline and stronger underlying business models.
Saunders said the principles behind traditional trading have changed significantly in recent years. While the industry was once primarily associated with questionable or distressed books, insurers are now increasingly using retrospective structures as a tool for capital optimization, earnings protection and strategic repositioning.
He also highlighted the increasing prevalence of more complex and multi-jurisdictional transactions, while long-term partnerships and follow-on business arrangements are creating greater continuity between cedents and legacy providers.
Some participants noted that the market is increasingly aligned with the life insurance industry, both operationally and commercially. Greater use of rated balance sheets, more collaborative claims arrangements and renewable structuring all contribute to a closer relationship between real-time underwriting and retroactive risk solutions.
Sanford describes how innovation is broadening markets beyond traditional runoff trading. New structures such as forward exit options and rolling capital solutions allow companies to be more flexible in responding to insurers’ changing capital and reserve management requirements.
He also stressed the importance of maintaining a solutions-focused mindset, noting that traditional providers can no longer rely solely on standard deal structures if they want to continue to expand their markets.
Dixon said retroactive and legacy solutions were becoming increasingly important in supporting insurers through softer market conditions, particularly around M&A activity, reserve accumulation and long-tail volatility.
He highlighted how retroactive reinsurance is now used regularly both before and after acquisitions to simplify portfolios, reduce operational disruption and support strategic growth plans.
Volatility in reserves, particularly in the U.S. casualty business, remained a major theme throughout the discussion. Ryland noted that the worsening long-tail casualty situation in the U.S. and erosion of workers’ compensation buffers are continuing to drive demand for retroactive solutions.
He also noted that increasing scrutiny of reserve quality and capital planning by rating agencies, regulators and investors is helping to push traceability structures further into the mainstream.
Booth provides a more regional perspective on the European runoff market, describing an industry that is increasingly divided between large traditional aggregators and companies focused on small and medium-sized opportunities.
He said economic activity in parts of the continent continued to be driven primarily by business line disruptions, business model failures and insurers seeking operational relief rather than pure capital optimization.
Many smaller European deals still resemble the traditional run-off market of a decade ago, with companies disposing of non-core or underperforming books rather than pursuing broader balance sheet restructuring strategies.
At the same time, he noted that there are fewer active players in this market segment, creating opportunities for specialist providers with the expertise and operational infrastructure to manage niche portfolios and regional risks.
Booth pointed to DARAG’s recent experience handling specialist business in Scandinavia as an example of the increasing need for traditional companies to balance growth opportunities with concentration risks and operational complexity.
He also said structured protection mechanisms and more complex reinsurance arrangements were becoming increasingly important to allow companies to manage volatility while continuing to participate in dedicated run-off opportunities.
Hawkins said the overall market opportunity remains large, but he believes future growth will depend on the industry’s ability to adapt both operationally and financially.
He highlighted the operational demands involved in executing legacy transactions and said reducing complexity and increasing efficiency will be critical to driving further growth across the industry.
Hawkins suggests that the next phase of market growth will come from expanding the breadth of solutions available and tailoring approaches more closely aligned with insurers’ strategic objectives, rather than simply increasing the number of traditional run-off transactions.
Drake reflects on how much the market has changed over the past two decades from a legal and regulatory perspective. He noted that despite increasing deal size and complexity, traditional industries have remained relatively collaborative compared with previous runoff cycles, which were often dominated by litigation and arbitration.
He also pointed to increasing regulatory involvement in legacy operations, including developments around recovery and resolution plans in Europe and growing focus on the solvent exit plan framework in the UK.
Technology and operational efficiency were also recurring themes throughout the seminar, particularly around data infrastructure, artificial intelligence and claims analytics.
Attendees discussed how companies are investing heavily in data management and predictive technology to improve claims insights, speed up processes and support more efficient portfolio analysis. AI-enabled tools and automation are increasingly seen as core to scaling operations and improving trade execution across markets.
Farrer Fisher said that from a talent perspective, the industry remains in a strong position, supported by expertise in actuarial, legal, investment, operations and risk disciplines.
She added that as the industry becomes increasingly data-led and operationally complex, talent development, succession planning and wider access to technology-driven skill sets will remain important priorities.
Overall, the discussion reinforced the view that traditional markets no longer operate on the fringes of the re/insurance industry. Instead, it is becoming a more sophisticated and strategic component of an insurer’s long-term capital, reserving and operating planning.
As pressures on reserve adequacy, capital efficiency and regulatory scrutiny continue to mount, participants said the role of retroactive and legacy solutions is likely to become more embedded in the broader re/insurance market.