Transferring Reserve Risk

Transferring Reserve Risk

Learn how transferring reserve risk can help provide capital relief and protection from earnings volatility for your organization.

Why are Reserve Risk Solutions Important?

Insurers’ capital adequacy and earnings are under pressure because of increased catastrophe events, a volatile investment market and significant increases in reinsurance pricing. Insurance companies can free up capital and reduce earnings volatility by transferring loss reserves. This will ultimately improve balance sheet strength and power growth opportunities.

The legacy market consists of reinsurers specializing in loss reserve transactions not directly related to the traditional reinsurance market. Over the last six years, capital for legacy reinsurers has tripled from $6 billion to $20 billion. This increased capital supply and rising interest rates make the pricing on legacy deals more attractive than ever.

How Aon Can Help

Capital advisory works with insurance clients to enhance return on capital by matching risk with capital. We optimize capital for insurance companies to achieve growth and return targets while managing stakeholder expectations across group and underlying entities. We can structure loss reserve covers to free up capital allocated to lines of business in run-off or that are no longer part of an insurer’s core business strategy.

Loss reserve covers can help insurance companies:

  • Protect earnings
  • Reduce volatility around reserve development
  • Provide capital to support new growth opportunities
  • Improve operations by separating reserve liabilities after significant underwriting and pricing changes
  • Alleviate internal resources by transferring claims handling and administration to the legacy market


Over the last six years, capital for legacy reinsurers has tripled from $6 billion to $20 billion. 

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Reserve risk is expected to drive insurance companies’ future S&P capital requirements. Legacy reinsurance releases capital-supporting reserves by transferring uncertainty to the legacy market. Aon expects legacy capital can fuel growth to $10B.

Barry Gale
Head of Legacy, Aon’s Capital Advisory

How We Collaborate with Clients

Matching risk against available legacy capital, Aon’s Capital Advisory collaborates with insurance clients to create a nimble framework that allows for rapid reallocation of capital to profitable growth opportunities.

Aon advises insurance clients on:

Why Work with Us

Powered by our data and analytics capabilities, Aon is a full-service capital advisor that uses our scale to fuel innovation in deal structures.

  • Global Broking Team

    Broking team with colleagues dedicated to legacy placements in the U.S., UK and Bermuda

  • Complex Loss Reserve Experience

    Executed over 40 complex loss reserve covers involving $30 billion of reserves by a team with 100+ years of legacy experience

  • Legacy Market Relationships

    Long-standing relationships with all established legacy markets while supporting the development of new markets

  • Challenging Placement Record

    Proven track record of placing covers on challenging liabilities such as asbestos, environmental, sexual abuse, medical professional liability, D&O and construction defect

  • Fully Integrated Team

    Capital advisory is a fully integrated team of experienced legacy brokers, a corporate finance team, and rating agency specialists with seamless access to wider legal, actuarial and claims support across Aon’s reinsurance business

  • Understanding of Accounting Guidelines

    Clear understanding of accounting guidelines including GAAP, U.S. Statutory and IFRS; the impact on rating agency capital models such as S&P and AM Best’s BCAR; and regulatory frameworks including Solvency II, BSCR and U.S. risk-based capital


Executed over 40 complex loss reserve covers involving $30 billion of reserves by a team with 100+ years of legacy experience

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Today’s transaction provides AXIS with retroactive reinsurance cover for businesses we generally exited years ago. We acquired the protection at a cost substantially in line with our carried reserves.

Pete Vogt
Chief Financial Officer, AXIS

Let’s Connect

Talk to Our Team

Are you ready to learn how your organization can benefit from legacy solutions?