Bermuda's position as a global hub for legacy insurance business has been reinforced by a new report from AM Best, which highlights the growing influence of run-off activity in shaping the island's reinsurance sector.

The rating agency's analysis points to the increasing prominence of run-off transactions — in which discontinued insurance portfolios are acquired and managed by specialist firms — as a defining feature of the international re/insurance landscape. Bermuda, with its established regulatory framework and deep pool of legacy expertise, has emerged as the natural home for much of this business.

According to the report, the legacy market has expanded considerably in recent years, driven by insurers seeking to free up capital tied to old liabilities and streamline their operations. Bermuda-based acquirers and reinsurers have been at the forefront of this trend, completing a series of high-profile loss portfolio transfers and adverse development covers with counterparties in North America and Europe.

Industry observers note that the growth of the run-off sector brings both opportunity and scrutiny. While the business generates fee income and employment on the island, regulators and rating agencies continue to monitor reserving practices and capital adequacy among legacy operators. AM Best's findings suggest Bermuda is well placed to benefit from further consolidation in the sector, cementing its reputation as the jurisdiction of choice for legacy solutions.