Unlocking value in run-off
Welcome to the tenth edition of our Survey of Discontinued Insurance Business in Europe which is produced once again in conjunction with IRLA. We are extremely grateful to everyone who participated in the Survey.
The Survey analyses questionnaire results from parties across Continental Europe and the UK. Additionally, it includes thought-provoking insight from a number of our industry experts on key issues impacting the run-off market.
The Survey shows that the size of the run-off market remains at just under €250bn with significant potential for this to grow.
Learn more about our key findings below.
By common consensus the past year has seen almost unparalleled levels of M&A activity in the legacy sector, with most of the established run-off consolidators concluding transactions.
This looks set to continue as 77% of Survey respondents indicated that they or their client were likely or highly likely to engage in restructuring or exit activity in the next three years.
The run-off transaction landscape is the busiest it has been in years. What has been most interesting to see from a geographical perspective is the increased activity across Continental Europe alongside a very lively UK market. Solvency II is key driver for company boards when assessing their portfolios and considering the capital implications of holding or disposing of certain lines of business.
The key strategic objectives for owners of (re)insurance run-off business have been broadly consistent with previous Surveys. Participants continue to cite releasing capital, orderly run-off and early finality as the primary objectives of their strategic run-off plans.
Survey respondents cited engaging stakeholders at board level, adverse claims development and compliance with Solvency II as the key challenges they face in trying to achieve their run-off objectives.
Solvency II has been expected to be a driver for increased focus by companies on legacy business. The Survey indicates it has become a reality since implemented. Respondents cite practical implications include increased focus on underperforming lines of business and exit options. As Solvency II becomes embedded within (re)insurers legacy business, it is expected to continue to be in the spotlight.
"The run-off market has been buoyant as Solvency II appears to have driven greater focus on discontinued lines of business. This has increased M&A activity amongst some of the larger (re)insurers, and has also begun to create capital challenges for a number of smaller market participants."
Head of Market Initiatives and Industries
Tel: +44 (0) 207 804 5067
Director, Solutions for Discontinued Insurance Business
Tel: +44 (0) 20 7213 3197