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As more insurers regard the use of run-off as a mainstream strategic tool, so investors have responded—backing the launch and growth of specialist consolidators geared up to buying and managing portfolios of business in run-off. Intelligent Insurer reports.
A confluence of influences that have been gaining momentum for a number of years is combining to drive more insurers and reinsurers to consider run-off or the divestment of business as a viable strategic option. This, in turn, is leading to a rapid uptick in mergers and acquisitions (M&A) that have this as their driver.
Several factors are driving this change. In part, the 2008 financial crisis created a catalyst for change in the industry due to low interest rates and pressures from investors for returns. This forced more parent companies to look to retrench and, as a result, more re/insurers started to put blocks of business into run-off or look for exit strategies.
This trend was true in the US and in many areas of Europe as domestic carriers looked to reduce risks and focus on their core businesses and improve return on equity (RoE). Some of the bigger players have started to move business into run-off to help them achieve this.
Run-off, Insurers, Reinsurers, Mergers, Acquisitions, Investors, RoE, Solvency II, Premia, Capital, Equity, Consultancy