Unlocking value in run-off
Survey of Discontinued Insurance Business in Europe – sixth edition

“We are seeing increasing focus on legacy liabilities across Europe, and in particular the exploration of exit options for portfolios which are no longer core to the business”

Source: Survey of Discontinued Insurance Business in Europe – sixth edition, PwC

The Survey looks at the challenges, objectives and strategies of organisations managing run-off business across Europe. Produced in conjunction with the Insurance & Reinsurance Legacy Association, the Survey analyses results from a cross-section of discontinued and live insurers across Europe.

 

Figure 3: Survey of Discontinued Insurance Business in Europe – sixth edition

Survey of Discontinued Insurance Business in Europe – sixth edition

Source: PwC

Figure 3 shows that the key objective for European insurers with dealing with their run-off liabilities has switched from releasing capital in last years’ edition to early finality in this edition of the Survey. 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 exits.

 

Trending this year:

  • Recent events suggest that the implementation of Solvency II is now likely to be deferred from January 2014 to January 2016. It is unlikely to inhibit the extent of restructuring activity in the run-off sector.
  • With capital efficiency at the forefront of the minds of organisations with run-off businesses, 71% of respondents are now concerned that the cost of capital will rise when Solvency II is ultimately introduced compared to half this figure a few years ago.
  • Restructuring is also still high on the agenda, with 92% of respondents considering that 2013-2015 will see a reasonable or significant amount of restructuring activity.
  • Midcap insurers and reinsurers as well as captives are now seen as most likely to restructure during that period.
  • Long tail claims continue to be the biggest concern influencing the ability to gain finality for run-off business in the UK compared to reputational risk to run-off business in Continental Europe.

Helping to unlock value in run-off

The Solutions for Discontinued Insurance Business team at PwC has access to more than 200 specialists focusing on providing restructuring and operational consulting services to companies in the insurance and reinsurance industry with run-off business. The team is able to offer advice on a range of issues including bringing finality to run-off and considering options such as sale or transfer of liabilities.

Previous edition

Fifth edition - A Survey of Discontinued Insurance in Europe