Aon plc forecasts strong momentum in legacy transactions at Lloyd’s of London, driven by softening reinsurance conditions, a rise in M&A activity and an increased corporate focus on addressing historic risk. According to the firm’s Lloyd’s Legacy Report – April 2026, the market is poised for acceleration as capital allocation becomes more disciplined across the industry. This expected uptick follows a period of quieter deal activity in 2024 and 2025, which Aon attributes to strong broader market performance and relatively benign catastrophe activity. The report highlights the growing scale and capability of the specialist Reinsurance-to-Close (RITC) market at Lloyd’s. Since 2010, five dedicated RITC syndicates, RiverStone, Enstar, Premia, Compre and Marco, have collectively assumed almost US$15 billion of reserves. Aon notes that this concentrated expertise brings additional capacity and enhanced claims expertise, alongside more sophisticated, data-driven reserving and portfolio management capabilities. For cedants, this deepening market capability can translate into reduced volatility, more efficient operations and the ability to unlock value for well-reserved portfolios through competitive deal dynamics and specialist run-off execution. As the market cycle shifts, Aon suggests that carriers are taking a more granular view of underperforming segments. Uncertainty regarding long-tail classes, specifically US casualty and aviation, continues to be a significant driver for those seeking legacy solutions. The report identifies strong indicators of sustained demand, noting that more than three quarters of Lloyd’s syndicates have not yet completed a legacy transaction. This signals significant untapped potential in the market. Meanwhile, repeat sellers account for around two thirds of reserves transacted since 2015, demonstrating that many insurers are using legacy as a recurring strategic lever. In many cases, cedants rebuild material reserve bases within two to three years. This supports repeatable capital recycling and provides a disciplined way to manage back-year risk through the cycle. Rob Margetts, legacy reinsurance broker at Aon, says: “The Lloyd’s legacy market has evolved from a specialist rectification solution into a mainstream tool for managing balance sheets, capital and earnings. As insurers operate in a more competitive environment and prepare for a potential softening of rates across multiple classes, Aon expects legacy transactions to play an increasingly important role in helping managing agents and capital providers protect performance, recycle capital and maintain underwriting appetite. We provide a range of legacy solutions to our clients as part of a broader toolkit for strategic capital management.” Aon highlights how legacy solutions help insurers release capital tied up in prior-year reserve risk, protect current-year performance and support underwriting capacity. This is particularly relevant when raising fresh capital becomes more challenging as the cycle softens. Additional benefits identified by the report include improved earnings stability by reducing exposure to back-year reserve volatility. Aon also highlights the ability to release trapped capital and redeploy it toward growth, underwriting strategy and resilience. Operational efficiency is another factor, with carriers able to transition legacy blocks away from legacy systems and resource constraints. Furthermore, the report suggests that legacy solutions support M&A and restructuring by ring-fencing historic risks that are not central to the strategic thesis. Based in London, Aon continues to monitor these shifting dynamics, noting that the ability to manage historic risk remains a key strategic pillar for Lloyd’s participants looking to protect and grow their businesses in an increasingly complex risk environment.
