Insurance and legacy solutions

Our team has access to more than 200 specialists around the world providing restructuring and operational consulting services to companies in the insurance industry with legacy business and other corporates with long-tail or complex liabilities.

We provide advice, support and assistance to insurers, intermediaries and self-insureds who are:

  • considering the strategic options and implications of discontinuing business lines or operations
  • implementing restructuring options to bring finality to run-off, extinguish liabilities and release capital
  • looking to rationalise legacy operations to achieve operational efficiency; or
  • require insolvency contingency planning and execution.

How can we help?

Strategic reviews

We have unrivalled experience of assisting owners of discontinued business to identify and understand the options available in dealing with legacy portfolios. A strategic options review may typically consider the following:

  • Exit options (sale, run-off, schemes of arrangement, reinsurance)
  • Outsourcing vs. 'insourcing'
  • Domicile and other tax structuring opportunities
  • Modelling (e.g. the effect of future catastrophes)

We work closely with other specialist PwC teams to deliver bespoke solutions to meet the differing needs of businesses.

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Restructuring implementation

Our team was responsible for creating and delivering the ground-breaking restructuring of a corporate with Asbestos liabilities - the first in the UK. We also advise on exit routes for 'blue chip' captives.

We assist businesses in delivering the value associated with their strategic decisions by providing expert restructuring advice. We implement restructuring and finality solutions including Insurance Business Transfers, disposals and managed exits. Our advice allows capital to be released and recycled and certainty to be delivered to volatile legacy issues.

We have advised in the majority of solvent schemes and some of the most complex and high-profile Part VII transfers and disposals in the legacy sector.

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Advisory

By definition, legacy business is non-core and maximising operational effectiveness may not be top of the agenda.

Our team will give an independent view of a business’ operation and use our expertise and experience to provide innovative suggestions for improvement, such as:

  • claims management strategy, including when and if to litigate / arbitrate
  • skills and claims audits,
  • outsourcer / 'insourcer' reviews
  • reinsurance recoveries strategy, and
  • commutation strategy.

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Insurance insolvency

We can provide support in a number of areas, including but not limited to:

  • advice for directors in situations where solvency may be an issue,
  • innovative options for avoiding formal insolvency, and
  • acting as insolvency practitioners if insolvency is unavoidable.

We work with stakeholders such as creditors, policyholders, guarantors, regulators and shareholders in insolvency situations to optimise the outcome for all parties involved. We routinely manage run-off managers who assist with day-to-day operations of the estates. Our objective is to work towards a timely exit solution that returns value to creditors at the earliest opportunity.

Our current portfolio of insolvency assignments includes some of the largest and most complex in the market, such as Independent Insurance, Orion Insurance, Chester Street (formerly Iron Trades) and Folksam UK.

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Non-life insurance run-off deals Q2 2019

Q2 2019 highlights

7 deals announced

$2.76bn Estimated gross liabilities transacted

$444m Average deal value

  • Q2 continued on the strong transaction performance from Q1, with 7 deals publically announced. Although a fall in the number of transactions taking place against Q1, this slight dip in activity was similarly seen in the second quarter of 2018 and 2017.
  • Despite this backdrop, the average estimated value of transactions grew significantly from $146m in Q1, to $444m in Q2. This grow th in the average estimated value of transactions w as largely driven by the esure Group plc Loss Portfolio Transfer/Adverse Development Cover deal with estimated gross liabilities of $1.8bn, the largest transaction in 2019 and in the less traditional class of motor liability.
  • The types of business being transacted w as less varied this quarter, with the majority of liabilities either APH (asbestos, pollution and health hazards) or Motor liability. An interesting mix of both the traditional run-off portfolios that are still being transacted alongside personal lines liabilities which are becoming increasingly actively traded in the run-off market.
  • Last quarter we saw a surge of activity take place in the UK/Ireland, primarily driven by Lloyd’s activity. In comparison, this quarter saw a mixture of activity across the globe, with a similar number of deals spread across North America, Europe and UK.
  • The number of deals in H1 2019 (17 deals) remains steady in comparison to H1 2018 (17 deals) and H1 2017 (18 deals), an excellent indicator of the continued health of the non-life insurance run-off deals market.

See the details in our report

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Contact us

Dan Schwarzmann

Head of Market Initiatives and Industries, PwC United Kingdom

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