Welcome to the thirteenth edition of PwC’s Global Insurance Run-off Survey, which has been produced in conjunction with IRLA and AIRROC. The growth in legacy activity predicted in the last edition of this survey has materialised, boosted by significant investment in both new and existing legacy players. The market has maintained its momentum, with over 100 legacy deals publicly announced since our last survey, consistent with the volume in the prior period.
Survey respondents predict legacy deal activity will remain at record highs, with the US and Lloyd’s markets continuing to be particularly busy. Respondents further indicated that they expect the sector to be heavily influenced by factors such as increased levels of capital availability and hardening live market conditions which will ensure a strong supply pipeline over the next two years. We would like to thank everyone who responded to our survey. Learn more about some of our key findings below.
Overall, we estimate that the global run-off reserve has increased from approximately US$791bn to US$864bn; representing a 9% increase since the previous edition of our survey. While the North America region continues to dominate the global run-off market, with reserves of US$402bn, the UK and Continental Europe markets have a combined reserve of US$302bn. Our estimates of the run-off liability in other key territories, including Asia, the Middle East and South America, have also increased to US$160bn.
The majority of survey respondents believe the global legacy market is in the growth stage of its evolution. While only one in ten survey respondents indicated that they believe the market has reached maturity, a noticeable contingent responded that the market is continuing to emerge and take-off. This is in line with our review that legacy management is further growing, as it integrates itself into the traditional insurance life cycle.
Key drivers of entering into restructuring activity are consistent with the deal flow that has been observed in the market over the past two years. Releasing capital continues to be the primary driver, followed closely by disposing of non-core business and achieving early finality.
Respondents were asked the target internal rate of return (IRR) at which they foresee consolidators pricing legacy deals. Unsurprisingly, the majority of respondents expect consolidators to be pricing legacy deals at target IRRs of between 10-20%. This is broadly consistent with actual experience.
The source for all data within the graphics on this webpage is the ‘PwC Global Insurance Run-off Survey 2021’.
"The legacy market has never been as active as it has since our last survey, both from a deals perspective, but also from a legacy management perspective within groups. More of our professionals than ever are involved in providing insights and services to the market and we can only see this continuing to expand as the market evolves and develops.”
Head of Market Initiatives and Industries, PwC United Kingdom
Tel: +44 (0) 7778 211 066
Director, PwC United Kingdom
Tel: +44 (0) 7902 792216
Director, Deals, PwC United Kingdom
Tel: +44 (0)7720 425892