AIRROC London Event Discusses Increasingly Global Nature of Runoff

On May 12, 2015 AIRROC held our first international event in more than 5 years. The event, presented with Clyde & Co., examined the outlook for the international run-off market.

Martin Mankabady, a partner at Clyde & Co., said: “The run-off market is undergoing a period of transformation. Expansion has reached an unprecedented level in Europe with 2015 expected to mark the sixth year of growth as companies continue to reconsider their business models ahead of the imminent changes of Solvency II.” “We are seeing a geographic shift with the expansion of activity from the legacy market in London, into mainland Europe, but also to the U.S. and further afield. A strategic change is also in the works– run-off can no longer be considered purely a specialty area. In the past couple of years, a number of legacy acquisition companies have acquired or built underwriting businesses enabling the ability to create hybrid operations to provide an alternative investment flow for shareholders.”

The event included presentations on a range of run-off issues around finance, compliance, and claims, including a panel discussion on exit routes for companies looking to wrap up legacy business in the U.K. and the U.S.

Carolyn Fahey, said: “The U.S. run-off market is expanding in terms of the number of acquisitions being carried out. The tightening of the U.K. Prudential Regulation Authority’s rules around schemes of arrangement and capital extraction is likely to further dampen run-off activity in London, increasing the attraction of doing deals in the U.S..” “The recent introduction of LIMA in Vermont mirrors many of the aspects of Part VII transfer rules used in the U.K. and will further fuel market appetite for U.S. run-off acquisitions. With the bigger books, bigger returns, and more insurers available in a younger market, the U.S. is going to be the center of run-off attention for some time to come.”