1 March 2013 Insurance

Solvency II delay means run-off opportunity

The latest delay in the implementation of Solvency II until 2016 represents an opportunity for some insurers to deal with any outstanding run-off and US-based Asbestos Pollution and Health Hazard (APH) liabilities.

That is the view of Ruxley Ventures, the insurance investment boutique which specialises in acquiring risks of this nature. The business believed that the implementation of Solvency II will increase the capital requirements around such portfolios. The latest delay will give insurers a window of opportunity to deal with them.

In a research paper, Ruxley concludes that with Solvency II delayed until 2016, many insurers will be reassessing their old liabilities and considering what to do with them in advance of the new deadline. Ruxley advocates the option for European insurers of transferring these liabilities to a specialist run-off carrier, potentially achieving a profit at the same time.

This is a substantial market. In a survey of the run-off sector this year, PWC estimated that there are a staggering €220 billion of discontinued non-life liabilities held on the books of European insurers alone.

“Many in the insurance industry will be concerned at yet another delay in the implementation of Solvency II, particularly as most of them have already completed much of the necessary and expensive preparations,” said John Winter, CEO of Ruxley Ventures.

“However, Ruxley believes the delay should be treated as an opportunity to look again at old outstanding liabilities, and with the sufficient time now available, consider a transfer and the profit that could be generated.”

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