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 2020

Q2 2020 deal activity by region
  • Executed deals have remained relatively steady in Q2 2020 despite the potential challenges presented by completing deals during the COVID-19 pandemic, with 12 deals publicly announced. With a number of smaller value deals, the overall total estimated liabilities transacting dropped from $2.1bn in Q1 2020 to $1.3bn in Q2 2020.
  • Six different consolidators have transacted during Q2 2020, bringing the total number of active market acquirers during the year to 10. Apart from one transaction where the purchaser has not been disclosed, these were all established market participants. Given the current market environment and opportunities in the sector, we expect to see some new entrants announce deals before the end of the year.
  • North America has been the most active in terms of volume and value of deals, continuing recent trends, but we expect the UK, within Lloyd’s in particular, to see deal activity increase as the year progresses.
  • Whilst currently behind the figures for 2019 in terms of value ($5.4bn in 2019 versus $3.4bn in 2020), 2020 continues to be a strong transaction year and the volume of deals has outpaced the same period last year (21 deals in 2019 versus 25 deals in 2020).

See the details in our report

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Contact us

Dan Schwarzmann

Dan Schwarzmann

Head of Market Initiatives and Industries, PwC United Kingdom

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