In our previous briefing note from May 2025,1 we discussed how we expected numbers of non-life Part VII transfers, which had been subdued for a number of years, to see an uptick. In this article we look at both the transfers that took place in 2025 and expectations for 2026.
Background
Part VII transfers are court-sanctioned novations of portfolios of insurance policies from one insurer to another. They are typically used by insurers as a means of disposing of business that no longer fits with their future strategy, achieving both legal and financial finality, or as a means of consolidating business into a single insurer, often following an acquisition.
The process generally takes a year or more to complete and begins with notifying the Prudential Regulation Authority (PRA). The PRA must approve the appointment of an independent expert (usually an actuary) who will assess whether any party will be materially adversely affected by the transfer. The independent expert prepares a report outlining the results of their analysis, which is submitted to the court ahead of the first of two hearings, known as the ‘directions hearing’. The PRA and Financial Conduct Authority (FCA) also prepare reports to the court outlining their respective views regarding the proposed transfer. Both will also review the independent expert’s report prior to its finalisation, with the PRA being required to approve the form of the report. Following the directions hearing, assuming that the judge is satisfied at the hearing that the transfer process should proceed, the parties to the transfer will notify relevant policyholders and other parties impacted by the proposed transfer, in accordance with a communications plan approved at the directions hearing. Subsequent to notifications being made, a period of at least six weeks is normally expected before the transfer can proceed to the final ‘sanction hearing’. Ahead of the sanction hearing, the independent expert submits a further report, providing details of any updates to their analysis since the initial report, including commenting on issues or objections raised by interested parties subsequent to receiving the notifications, and whether this has led to any changes in the conclusions set out in the earlier report. The PRA and FCA also provide further submissions to the court ahead of the sanction hearing. Any other affected party may also make representations at the hearing. Ultimately the judge has discretion to sanction or deny the proposed transfer.
Further background information on Part VIIs, including the motivators of transfers, the impact of Brexit and trends in recent years can be found in our previous paper from December 2023.2
Developments in 2025
Despite previous expectations, 2025 saw only two non-life transfers sanctioned – the same low number seen in 2024 and 2023. However, a further five transfers had directions hearings in 2025, four of which have already been sanctioned in the early months of 2026. In addition, we are aware of plans for several further transfers that may take place this year. Consequently, 2026 is shaping up to be a bumper year for non-life Part VII sanctions.
Transfers sanctioned in 2025
Southern Rock motor business
This was the transfer of UK personal motor insurance business from Southern Rock to Alwyn, both Gibraltar-based members of the Arch Capital Group. Southern Rock and Alwyn had been co-insuring the same business for many years. Arch Capital Group acquired Southern Rock in 2021 and placed it into run-off in 2023, following which Alwyn continued writing the business previously written by Southern Rock. The purpose of the transfer was essentially to consolidate legal entities within the group following the acquisition.
Whilst Gibraltar has its own, regulator-approved transfer process, changes to the Part VII legislation following Brexit mean that insurance business transfers in Gibraltar that involve the transfer of UK business must now be sanctioned by the UK High Court by means of a Part VII transfer. The judge in the Southern Rock transfer accepted this position. A separate process under Gibraltar legislation was also necessary to transfer the small numbers of Gibraltar policies.
It is also worth noting that, post-Brexit, companies domiciled in Gibraltar are the only non-UK companies that can accept transfers under Part VII. Gibraltar’s unique position could see it emerge as a hub for legacy insurers; we have seen some interest from legacy acquirers in setting up operations in Gibraltar, as well as interest in run-off opportunities in the Gibraltar market itself. We therefore expect to see additional Part VII transfers involving Gibraltar-based insurers.
Enstar UK company consolidation
The second non-life transfer that was sanctioned in 2025 was a transfer of the businesses of Mercantile Indemnity Company Limited (‘Mercantile’) and Rombalds Run-Off Limited (‘Rombalds’) into River Thames Insurance Company Limited (‘River Thames’). All three companies were members of Enstar Group. The purpose of the transfer was to consolidate Enstar Group’s UK non-life run-off business into a single entity into order to achieve operational and capital efficiencies.
Mercantile had accepted by means of Part VII transfer in 2019 a portfolio containing a large book of UK employers’ liability (EL) policies with associated asbestos and other latent claims. Rombalds’ book was far smaller but included substantial amounts of US asbestos, pollution and health hazard (APH) claims. A feature of the case was the proportion of the business governed by US law and whether the US courts would enforce an order of the High Court sanctioning the scheme.
This is an issue that has arisen in numerous transfers in the past. Legal opinions are often sought from US counsel on the likely enforceability of the Part VII by the US courts. The judge in this case reiterated earlier judgements that the court can ordinarily be satisfied that it has been provided with and can rely on ‘credible evidence’ that the scheme will be recognised and given effect. In this case no independent expert opinion on foreign law was given, but the judge was nevertheless satisfied that the evidence provided was clear, conventional and convincing in its conclusion that a US court would likely recognise a High Court order sanctioning the scheme. However, he stated that his preference was that evidence of foreign law be provided by an independent legal expert, especially if the issue arises in relation to jurisdictions in respect of which the point arises less often and there is much greater uncertainty than the more usual case of the US.
Transfers sanctioned in early 2026
As noted above, four of the five other transfer schemes that had a directions hearing in 2025 have now been sanctioned. These are discussed briefly below.
Zurich EL business transfer to Catalina
Back in 2018, Zurich announced that it was offloading a portfolio of pre-2007 UK legacy EL insurance policies. Under the deal, the liabilities would initially be reinsured to a Bermuda-based Catalina entity, before the legal transfer of liabilities to UK-based Catalina London Limited (CLL), within two years. At the time, this portfolio was said to contain liabilities valued at around $2 billion, much of which related to asbestos exposures. An initial attempt to complete the legal transfer faltered after the PRA initiated a Section 166 review looking to ensure that Catalina’s UK companies were positioned for the planned significant growth in the business.
Both Zurich and Catalina then carried out internal Part VII transfers reorganising their operations in the UK. Post-Brexit Zurich transferred business, including the legacy EL portfolio, from the UK branch of Zurich Insurance plc (an Irish company) to a UK branch of Zurich Insurance Company Ltd (a Swiss company). For its part, Catalina restructured its UK operations by transferring the business of CLL and AGF Insurance Limited into Catalina Worthing Insurance Limited (CWIL). Both the Zurich and Catalina reorganisations were implemented by Part VII transfers and sanctioned in 2022.
By February 2023, Catalina announced that the brokered non-life P&C legacy market no longer offered an attractive risk-reward profile and that it would refocus on a broader range of liabilities going forward, including life insurance exposures.
Nevertheless, work continued on completing the transfer of the Zurich EL portfolio. However, a further Section 166 review was commissioned by the PRA in 2023 into the operational readiness of CWIL to accept the transfer of the Zurich business. In an update to its policy statement on insurance business transfers in 2022, the PRA had stated its intention to commission Section 166 reviews in advance of proposed transfers involving run-off portfolios with liabilities of £100m or more that would increase the transferee’s technical provisions by more than 10%.
The independent expert’s report on the transfer refers to part of the Section 166 review looking at reserving and parameterisation of the capital modelling and describes a number of findings and actions taken by CWIL following that review.
The transfer of Zurich’s legacy EL portfolio finally completed as at 31 March 2026.
Direct Line commercial lines business transfer to Intact (former RSA)
In September 2023 it was announced that Royal and Sun Alliance Insurance Limited (RSA), would purchase the brokered commercial lines operations of Direct Line Group. Note that RSA was subsequently renamed Intact Insurance UK Limited. This reflects rebranding following the 2021 sale of RSA group to Intact Financial Corporation.
The purpose of the Part VII scheme was to transfer existing commercial lines insurance policies (written prior to the sale to RSA) to RSA. The transfer completed as at 1 April 2026.
Subsequent to the sale of the commercial lines operations, all of Direct Line Group was sold to Aviva in 2025. A further Part VII transfer may be seen as Aviva integrates Direct Line into its existing business.
River Re business transfer to Riverstone
River Re was formerly known as Renaissance Re (UK), and before that Tokio Millennium Re (UK). It entered run-off in 2015. In 2020, it was acquired by a buy-out fund managed by AXA Liabilities Managers and backed by third-party capital. According to the independent expert’s report, the fund is in a divestment phase and the Part VII transfer of the portfolio into Riverstone’s UK entity is a means of achieving legal finality to the portfolio, which consists of a variety of motor liability, property and political risk exposures.
It is noted that in late 2020, it was reported that AXA Liabilities Managers had stopped bidding for external legacy deals and had shifted attention to managing its current portfolio.
Inceptum business transfer to British Reserve
Inceptum Insurance Company Limited was a run-off consolidation vehicle previously owned by the R&Q group. In 2022 it accepted, by means of Part VII transfer, a portfolio of legacy business from QBE, along with liabilities from two other R&Q entities. Subsequent to R&Q group entering provisional liquidation in 2024, Inceptum was sold to rival legacy acquirer Marco Capital Group. British Reserve is Marco’s UK insurance entity, and the Part VII transfer served the purpose of consolidating its UK insurance businesses by transferring all the business of Inceptum into British Reserve.
Transfers due to be sanctioned in 2026
IRB-Brasil UK branch transfer to Community Re
This transfer involves a small portfolio of legacy APH exposures written by the UK branch of Brazilian reinsurer IRB-Brasil that has been in run-off since 1982. The proposed Part VII would transfer the IRB-Brasil portfolio to Community Re, a run-off insurer acquired by the Carrick Group in 2020. Carrick is a relatively new entrant to the non-life legacy business, having been formed in 2019, and it is the first Part VII transfer it has undertaken. The sanction hearing for the scheme is currently scheduled for 16 June 2026.
Concluding thoughts
The recent uptick in Part VII transfers demonstrates that they remain a powerful tool for insurers, both as a means of exiting business that is no longer core to an insurer, as well as consolidating existing operations, often after acquisitions, in order to achieve efficiencies. We expect to see several more transfers to emerge in 2026 (albeit some may not be sanctioned until next year). These are likely to be a mixture of disposals of non-core portfolios, as well as consolidations, some resulting from recent M&A activity in the live market.
How Milliman can help
Milliman is the leading provider of independent experts for Part VII transfers, having acted on more transfers (both non-life and life) over the past 10 years than any other firm. Our extensive experience covers a wide range of transfers of varying size and complexity. They have included transfers of traditional UK and US APH portfolios, as well as transfers of much more recent business across a wide range of lines. We have worked on disposals to the major run-off acquirers, as well as internal consolidations for major UK insurance groups.
Where we are not performing the role of independent expert, we are also able to assist and advise firms that are carrying out transfers.
Aside from our work on Part VIIs, we also have extensive experience with run-off business, including buyer and seller due diligence support in legacy transactions, reserve reviews and commutation valuations.
As the landscape of Part VII transfers evolves, Milliman remains committed to providing expert guidance and support to help navigate these complex processes.
1 Clarke, C. (9 May 2025). Are non-life Part VII transfers on the rise? Milliman. Retrieved 6 May 2026 from https://uk.milliman.com/en-GB/insight/non-life-part-vii-trasfers-rise.
2 Clarke, C. (6 December 2023). Non-life part VII transfers: A dwindling trend? Retrieved 6 May 2026 from https://uk.milliman.com/en-GB/insight/non-life-part-vii-transfers-a-dwindling-trend.