Run-off transaction drivers
- Insurance and reinsurance groups continue to experience increasing demands on capital driven by regulatory and rating agency requirements
- Disposing of run-off liabilities releases capital to be re-deployed in their core business
- Solvency II is causing a high level of focus on capital allocation across business lines in Europe
- Allows groups to focus management resource on growth and expansion opportunities rather than on legacy operations
- Live reinsurance businesses carry a different cost structure and often may not have the right expertise to expedite early finality
- Commuting old policies is difficult for live businesses as cedants are often current trading partners
- Publicly listed business will often have their share price held back by the perception of a problematic pool of claims because of legacy issues
- Sellers of discontinued businesses value both early release of capital and the certainty associated from a clean exit to a trusted counter-party