Welcome to the twelfth edition of our Survey of non-life legacy insurance business. In 2018 our team expanded its focus outside of Europe as the appetite for disposing of legacy liabilities gained momentum. We have seen that trend continue with nearly 100 non–life legacy deals being completed since the previous edition.
A significant number of Survey respondents consider it highly likely or likely, that they or their clients will engage in restructuring activity in the next three years, citing the release of capital and disposal of non–core business lines as key drivers for this activity. The Survey also suggests that levels of deal activity are set to continue, with the US expected to be particularly busy.
We would like to thank everyone who responded to our online survey.
Learn more about our key findings below.
Our estimate of non-life run-off liabilities has risen to nearly $800bn.
North America continued to dominate the run-off market in terms of size, according to our Survey responses. We estimate the total value of reserves held there to be US$364bn, representing an increase of US$14bn from our 2018 Survey. For Europe our estimate now stands at US$292bn, which is up US$17bn since the previous edition in 2018. The UK and Ireland accounts for US$11bn of this increase. Finally, our estimate for the Rest of the World has increased by US$20bn to US$135bn, predominantly driven by increases in the emerging markets of Asia and South America.
UK and US respondents continue to cite legacy management as being higher on the Board agenda than their Continental European counterparts. Despite growing numbers of publicly disclosed run-off transactions, the Survey results do not indicate legacy management as being a universally high priority yet.
70% of respondents believe that the level of investment activity in the legacy market will increase over the next two years.
Nearly 80% of all respondents to our Survey suggested they would be highly likely or likely to be involved in restructuring or exit activity over the next three years, with a particular concentration of these being in the US and UK. The main reasons expected to drive this restructuring activity are disposing of non-core business and releasing capital, and these views were consistent across our Survey respondents regardless of region.
Significant deal activity is expected by Survey respondents over the next two years with Survey responses being broadly consistent with actual experience since the beginning of 2018.
Respondents expect US and UK deal sizes to continue to outstrip Continental European deals.
The source for all data within the graphics on this webpage is the ‘PwC Global Insurance Run-off Survey 2019’.
"We have observed tremendous growth in the run-off sector in the last decade as it has developed into a key component of the insurance macro market. As insurance groups continue to embed the culture of repeatedly selling legacy insurance portfolios to drive capital efficiency, profitability or operational savings, I believe this market will continue to thrive as a way to create significant value."