At the Insurance & Reinsurance Legacy Association (IRLA) annual Congress event held in Brighton today, speakers highlighted the opportunity to innovate alongside the insurance-linked securities (ILS) market and sources of alternative capital, to provide solutions to aid in exit liquidity and support casualty ILS transactions.
At a media briefing held at the IRLA event, speakers discussed the growth of the legacy and retrospective reinsurance market, highlighting a continued shift towards capital-light models, and recent activity with alternative capital providers and ILS structures as a clear sign of evolution in the space.
Kevin Gill, Chairman of IRLA and a partner at EY, led the discussion and commented on the maturation of the legacy marketplace.
“We’ve seen the market really mature, and I think we’re seeing it at the moment. It really provides innovative capital solutions to the insurance market. That shows the evolution and maturity in this market, with that growth coming through both the opportunities the market faces, but also reacting to the normal competition the market has seen over that period of time,” Gill explained.
Nick Crossley, CEO of Enstar EU, spoke about the recent maturation of the legacy marketplace, saying, “Today we’ve moved a long way in terms of being able to offer solutions at scale right across the balance-sheet of some of the largest groups in the world, and being very meaningful in terms of placing ourselves at the heart of their strategies.
“The pace of growth of innovation in our market has been second to none. We’re born from being solution providers, trying to sort difficult situations managed through in the old world of restructuring, through to today’s world of complex capital solutions, where we’ve got that in our DNA.
“That desire to try and find a match for demand and an offering, and evolve our offering through trial and error, take it to new markets, new circumstances and new situations. That’s really at the heart of how we’ve grown and continue to operate as a sector, that drive for innovation.”
Will Bridger, Group CEO at Compre Group, highlighted the evolving trend for the legacy market to work as a solution provider to the ILS market and alternative capital structures.
“What we do as legacy businesses and retrospective reinsurers, we respond to our clients and their demands and their needs. I think for me, it’s the shift in the debate and discussion around tail risk management. We’re always going to see insurers wanting to move business off their balance sheet, but now there’s a step change in the conversation.
“If you add that to alternative capital really being a major part of the reinsurance market. New investors coming in look for an exit. Every investor that is placing their capital into any market, as they place their capital they want to know where their exit solution is.
“And we’ve seen that with a whole host of new developments, in the ILS market, with Fractal Re, and I think we’re only going to see more of that as alternative capital continues to sit alongside traditional capital in our market,” Bridger explained.
Speakers also said at the IRLA media briefing today, that the legacy market is expected to become significantly larger overtime, with a desire to move into a world of renewable retrospective deals and an expectation that more capital will look to the insurance space for investment opportunities, which legacy specialists can assist with.
Tom Dixon, Head of Legacy – UK, Lloyd’s & Bermuda at reinsurance broker Gallagher Re, brought up the way legacy specialists have been helping to get ILS structures such as casualty sidecars to market.
“So one of the one of the trends that we’re seeing that we think should be of great interest to the legacy market is casualty sidecars,” Dixon explained.
“With Fractal Re, with Enstar, we were able to develop a forward exit solution that gave the investors more certainty of the economics and the timing of an exit.
“That’s precipitated more interest from investors in the casualty space. Someone needs to be able to take on that tail risk when that event happens. So if you look at the size of the property sidecar market, could you see something grow on the casualty side, will the legacy market be a part of that, in creating that structure upfront?” Dixon said.
Crossley from Enstar later highlighted the capital light model, “Where we as a market have a real opportunity to help groups shift into finding the right spot that they want, for managing capital and volatility, and find the right spot on the curve.”
For investors seeking to access the returns of longer-tailed portfolios of insurance and reinsurance risks, the legacy sector’s desire to offer solutions to aid in investor liquidity and exit certainty is a key component of this avenue of growth in the ILS market.
IRLA Chairman Gill summed up the briefing by saying, “I hope you see that the legacy market has really matured in the last few years. It’s more relevant and closer to the live market than I’ve ever seen in my career in this marketplace. I hope you’ve seen from the comments today, how exciting the opportunity will be for this market going forward. That combination of relevance, resilience and innovation really gives this market a very bright future.”
To learn more about the casualty ILS market opportunity watch our new video from the recent ILS NYC 2025 conference here.
