Finality was the important message that came out of PwC’s sixth survey, ‘Discontinued Insurance Business in Europe’, which said it was key for legacy insurance liabilities.
Respondents are considering a wide range of mechanisms to deliver exits for their run-off business with outright disposals and solvent schemes of arrangement being the most commonly considered.
Dan Schwarzmann, leader of the solutions for discontinued insurance run-off team, PwC said:
“We are seeing increasing focus on legacy liabilities across Europe by large ongoing insurance organisations and in particular the exploration of exit options for portfolios which are no longer core to the business. This has led to a steady stream of exits over the past 12 months and we expect restructuring activity to continue across Europe in 2013.
“The extent of M&A activity in the run-off sector is unlikely to be inhibited by the delays to Solvency II’s implementation. The continued appetite of established run-off acquirers for transactions and the increasing attention on the sector by new sources of capital should result in a stream of deals in the next two years.
“We expect opt-out schemes to figure increasingly as owners of discontinued business across Europe look to pro-actively manage their legacy portfolios towards finality.”
Randall & Quilter has been a prolific buyer of runoffs, most recently acquiring the entire issued share capital of Hickson Insurance Limited (HIL), an Isle of Man-domiciled captive insurer, for £525,000.
HIL had been in run-off since 2002, and chairman and CEO of R&Q Ken Randall said at the time that it showed his firm’s ability to provide attractive exit solutions for captive owners who have put their captives in run-off or are contemplating ceasing writing new business.
