Mayer Brown Mid Year Update on Property Casualty Runoff and Legacy Transactions

Thus far in 2025, property & casualty runoff and legacy transactions activity has remained resilient across a range of loss portfolio transfers (LPTs), adverse development covers (ADCs), and portfolio sales. While deal volumes are somewhat below 2024’s pace, we continue to see steady execution across deals along with momentum and a constructive pipeline heading into year‑end. We are pleased to share the following recent highlights since our 2024 Year-End Update on US Property & Casualty Runoff update.

State of the Market and Outlook for 2025 Year-End

The global property & casualty runoff market has remained resilient in the first half of 2025, although deal activity has been somewhat quieter according to PwC’s recent Global Insurance Runoff Survey. According to PwC and other market reports:

• From January to August 2025, there were 25 publicly announced non-life runoff deals transferring an estimated US$1.1 billion in gross reserves, versus 33 deals and US$6.6 billion in 2024.
• However, Lloyd’s deal activity has been strong this year, with nine deals publicly announced in the first quarter of 2025.
• In general, deal activity has skewed toward smaller and mid-sized transactions this year, with the US$250 million to US$1 billion range seen as the prime opportunity range for deals.

Looking ahead, deal activity is expected to remain steady in the UK and Ireland, and the market remains optimistic that deal activity in North America will increase over the next 18 months. LPTs should continue to be the dominant structure for cedents seeking balance sheet protection, capital efficiency, and operational simplification, with ADCs continuing to be employed more narrowly to address specific needs. As acquirers have generally been more selective when doing deals recently, disciplined pricing and claims-led value creation will be central to getting transactions done through the rest of 2025. In addition, if property & casualty M&A deal activity picks up pace in the rest of the year and into 2026, LPTs and other legacy transactions should follow, as M&A parties have been increasingly using runoff transactions to shed certain exposures before closing or to carve them out post-closing. Also, private equity and other investors remain interested in the runoff and legacy sector, which should continue to provide capital to help deals from the buy-side.

Recent Mayer Brown Runoff Deals

We have included below a selection of our runoff deals in 2025 so far. A fuller overview of our runoff and legacy transactions work can be found in our Runoff Solutions brochure.

• Represented National Casualty Company of America, Limited, National Casualty Company, UK Branch, and Nationwide General Insurance Company, UK Branch on a loss-portfolio transfer arrangement with Carrick Re Ltd. The business in question has been in run off since 1974 and consists of residual claims and exposures stemming primarily from property and casualty reinsurance tied to US based Fortune 500 firms.
• Representing a major property & casualty group in LPT transaction for book of US property & casualty business.
• Representing seller in sale of insurance companies in runoff.
• Advising clients on broad range of major M&A, financing and other transactions, including ILS and side cars, in the insurance industry.

Legal and Regulatory Developments

Regulatory scrutiny continues to focus on transparency, collateralization, and risk transfer effectiveness in reinsurance and legacy transactions. Key relevant themes from recent activity at the National Association of Insurance Commissioners (NAIC) include:

• The Reinsurance (E) Task Force has advanced workstreams on certified and reciprocal jurisdiction reinsurers, reflecting broader adoption of passporting mechanisms and increased state participation.
• Implementation of Actuarial Guideline LV (AG 55) is progressing for certain life and annuity reinsurance transactions. While principally life‑focused, the trajectory of this regulatory workstream underscores regulators’ emphasis on robust asset adequacy and risk governance—principles that continue to inform P&C legacy transactions.
• Ongoing initiatives include refined reinsurance worksheets and enhanced reporting for funds‑withheld and modified coinsurance arrangements. The Reinsurance (E) Task Force also considered, but did not act upon at the recent meeting, a proposal to permit a new form of surety bond as reinsurance collateral for unearned premium reserves.
• Lloyd’s has introduced enhanced oversight measures for legacy reinsurance transactions, effective from 2025, to ensure such deals meet its standards on underwriting, reserving, claims, capital, and operational capability. All legacy transactions—including reinsurance to close (RITCs), LPTs, and ADCs—will now require pre-completion approval from Lloyd’s following review by a new Legacy Review Panel and final sign-off by the Capital and Planning Group. Syndicates must engage with Lloyd’s early in the process, provide detailed due diligence and integration plans, and quantify capital impacts through an updated Lloyd’s Capital Return. The strengthened framework aims to safeguard market stability and uphold discipline across legacy activity within the Lloyd’s marketplace.

Our team continues to monitor these developments closely, including through regular attendance at the NAIC National Meetings and publication of updates with respect to those meetings (see, for example, our US NAIC Summer 2025 National Meeting Highlights). We expect further clarification around reporting expectations and collateral frameworks that will likely be relevant to counterparties in LPTs and other legacy structures.

Mayer Brown’s Insurance Industry Events

Below are some of the events presented by Mayer Brown for the insurance industry and the runoff sector:

• We are very pleased to host our eleventh annual Mayer Brown Insurance Industry Forum: What's Ahead for Deal Makers in our New York office on October 30, 2025. This year’s Forum will explore recent trends and developments impacting strategic deal-making in the insurance industry, including M&A, capital raising, convergence between insurance and asset management and regulatory considerations. For those interested in attending, please contact Amanda Southard at asouthard@mayerbrown.com or +1 212 506 2170.
• We were pleased to host the Mayer Brown/AIRROC Runoff Deal Forum for the seventh year in our New York office on Wednesday, February 12, 2025, where we welcomed over 100. The event featured panel discussions such as the State of the Market and Beyond the Deal: Navigating Post-Closing Challenges in Legacy Transactions, with industry experts and a Legal and Regulatory Developments Roundtable in which Mayer Brown attorneys provided updates. Mayer Brown looks forward to hosting the 2026 Mayer Brown/AIRROC Runoff Deal Forum in February 2026 in our New York office; the specific date is to be announced.
• In July 2025, Mayer Brown co-hosted a webinar with AIRROC’s NextGen Council, “Legacy Liftoff: Launching into Runoff Fundamentals,” an interactive webinar designed to provide emerging professionals with a comprehensive primer on the ever-evolving insurance runoff market. Panelists included a diverse range of industry experts, including Mayer Brown associate Juliana Toes.