Run-off: The turkeys who voted for Christmas
AIG, Liberty, The Hartford, CNA, Aviva, QBE, RSA, Allianz and AXA have all undertaken legacy transactions in recent history in order to free up management time and release trapped capital. Legacy portfolios consume capital and act as a drag on return on equity.
In a world of soft re/insurance rates, low interest rates, mark-to-market portfolio losses and a dwindling pot from which to conjure up prior year reserve releases, disposing of legacy portfolios is an increasingly important mechanism in the capital management toolbox.
Yet legacy consolidators persistently encounter reticence among sellers in the small/mid-cap legacy market. US APH or workers’ compensation and UK employers’ liability books in excess of $500 million are sizeable enough to capture the attention of the C-suite who can see how shareholders benefit from a sale. Smaller legacy books, however, tend to slip under the radar.
