Global reinsurer Swiss Re’s inaugural Legacy Market Dialogue (LMD) brought together experts from across the expanding P&C legacy marketplace, to debate perspectives and reflect on the state of an increasingly complex and nuanced part of the risk transfer universe.
Across February 10th and 11th in Rüschlikon, Switzerland, senior legacy sector representatives from insurers, reinsurers, legacy acquirers, brokers, and advisers, discussed the past and present state of the market, the potential impact of macro and geopolitical issues, as well as an overview of the US and APAC legacy markets.
The session began with a look back at the history of the legacy market, during which participants highlighted initial motivations for some of the earliest deals, the influence of Solvency II regulations and hard and soft market cycles, and the shift towards capital and balance sheet considerations.
While participants noted that legacy can be a challenge for some to prioritise when profits are strong, suggesting a greater focus on legacy in a soft phase of the reinsurance market cycle, Swiss Re’s analysis finds that legacy is driven by the interaction of market conditions, capital costs, and portfolio performance, rather than a single factor.
“Strong markets may delay transactions, but do not remove the underlying need. As conditions evolve, legacy tends to re-emerge as a tool to address specific pressures rather than as a constant feature of portfolio management – as participants reflected on past adoption,” explains the reinsurer in its LMD report.
Participants highlighted that today, growth in the legacy market is more stable than it was during the recent years of rapid expansion, with many highlighting the need for underwriting judgement, claims understanding, and the ability to assess how liabilities may evolve beyond modelled expectations.
LMD attendees also highlighted the role of capacity, both in terms of balance sheet strength and capabilities.
However, participants discussed that legacy remains primarily situational and is not yet consistently embedded in strategic portfolio management, suggesting that despite increased sophistication of the sector and awareness of the products on offer, legacy may still be underutilised, driven in part by perceived reputational considerations varying by region.
“The legacy market has become more mature as underwriting approaches and pricing assessments have become more selective. However, its use remains largely situational, driven by specific triggers rather than embedded in routine portfolio management. Perception and familiarity continue to shape adoption, resulting in a gap between growing awareness and consistent execution,” states the report.
Following the discussion on current market dynamics, attendees heard from Charlotte Mueller, European Chief Economist, Swiss Re Institute, who provided a forward-looking perspective on how future macroeconomic and geopolitical developments may influence the risk transfer space.
For the legacy space specifically, both uncertainty shocks from geopolitics and the cost of capital were described as particularly relevant.
Summarising the macro and geopolitics debate, the LMD report says: “Taken together, the macro discussion reinforced that the external operating environment is becoming more complex and structurally different from previous economic cycles. For insurers and reinsurers, factors such as interest rates, inflation and broader uncertainty are not only sources of volatility, but also shape how portfolios are managed and capital is deployed.”
Swiss Re’s inaugural LMD event also included a New York-based dialogue, during which the US legacy market was described as operating in a demanding landscape, moulded by macroeconomic uncertainty, policy developments, and questions around interest rates and inflation. While awareness of legacy solutions is relatively high in the US, execution remains more limited and typically occurs on an event-driven basis.
The scale of reserves, improved strategic understanding, and dedicated capital and execution expertise were highlighted as key reasons legacy is being considered in the US.
Participants also discussed factors shaping execution in the region, including regulatory frameworks (legal transfer mechanism), rating agency considerations the often event-driven nature of transactions.
During this part of the LMD event, attendees also heard how US casualty remains a key driver of legacy demand, and explored how the US legacy market differs from other regions.
“Broader adoption is unlikely to be driven by intent alone. It will be shaped by economics, rating treatment and regulatory comfort, and by whether carriers treat legacy as a practical capital management tool rather than a last-resort solution,” explains the report.
The APAC legacy market was the next topic of discussion, and reflected perspectives shared by Swiss Re’s Asia Pacific Structured Solutions team and from the cross-regional exchange with participants in Rüschlikon.
The session explored the region’s strong growth momentum, the potential for legacy given the fact APAC holds 13% of global non-life reserves, as well as market fragmentation between advanced and emerging economies, the impact of varying regulatory maturity and approaches, and more.
“APAC is relevant and increasingly so, but it is not yet a scaled or standardised legacy market. It remains a precedent-building region, where opportunities are often small, bespoke and relatively complex to execute for sole legacy acquirers without an established regional presence,” says Swiss Re.
The global reinsurer’s comprehensive and insightful LMD report, which is now available to download, concludes with three key takeaways from the inaugural meeting in Switzerland.
The first is the emergence of a more mature legacy transaction market, as the sector increasingly moves towards strategic relevance.
“The opportunity ahead lies in moving from reactive deployment to earlier, more strategic integration into how re/insurers manage their balance sheets and broader corporate and capital priorities,” says the report.
The second key takeaway concerns capacity being redefined, with capability and innovation touted as key differentiators.
Swiss Re explains: “As market needs evolve, capacity is no longer defined by capital alone, but by a broader set of capabilities – spanning evolving technical risk expertise, practical claims know-how and disciplined judgement, alongside a broader understanding of re/insurance beyond pure legacy.”
Third, and perhaps most important, is what could shape the next phase of legacy market development.
“While demand for legacy solutions is expected to grow – supported by increased M&A activity, more proactive portfolio steering after years of growth, and a renewed focus on allocating capital to core segments – the trajectory of the market will be shaped by a more complex external environment…
“Ultimately, the next phase of the market is likely to be defined not only by growing demand, but by how firmly legacy solutions are established as a strategic lever – particularly as market conditions tighten – enabling re/insurers to enhance capital flexibility and navigate increasing complexity.
“At the same time, the market itself will be tested on its resilience, and on the ability of legacy providers to deliver pragmatic execution and demonstrate increasingly sophisticated capabilities,” concludes the report.
You can view the full Swiss Re LMD report here.
