The first insurance license allowing a company to undertake run-off portfolio transfer solutions has been granted in Rhode Island, a first for the state.
ProTucket Insurance Company has been granted a license that sees it become the first Rhode Island domestic insurer established specifically for providing run-off portfolio transfer solutions, thanks to new state legislation alowing portfolio transfers of legacy and run-off insurance or reinsurance business to be effected, in a similar way to that seen in countries such as the UK.
“We estimate the value of US books in run-off, which could benefit from the Rhode Island legislation, to be as much as $100 billion,” said Artur Niemczewski, CEO of Pro. “Pro Global has over 25 years’ experience in managing run-off internationally and is extremely proud to continue its leading position within the legacy market. We are excited about the pipeline of business this could bring.”
The new Rhode Island run-off legislation could help to free up billions of trapped capital for insurers and reinsurance, which Niemczewsk said could improve the capital efficiency of the U.S. insurance industry.
Rhode Island’s Regulation 68 will allow run-off portfolios of insurance or reinsurance contracts to be transferred from a carrier into a protected cell within a Rhode Island domestic company, a similar process to a UK transfer under Part VII of the Financial Services and Markets Act.
These run-off portfolio transfers can offer full legal and financial finality to the transferring insurer, while the company accepting the portfolio will look to profit by managing risks and claims more efficiently.
ProTucket aims to offer a fully managed end-to-end service for insurers and reinsurers looking to transfer portfolios of re/insurance business, using Rhode Island Regulation 68. The company can create the necessary Insurance Business Transfer Plan, set up the protected cell for acceptance of the book of business, and provide other services such as claims management, regulatory reporting, and consulting.
“We are honored to be the first company to be granted a licence to implement Regulation 68 and are passionate about the benefits it will bring to our clients and the US insurance market,” commented Mory Katz, Head of Pro US. “We have worked closely with the Rhode Island Department of Business Regulation and greatly appreciate its assistance in the process.”
Mr Niemczewski also said; “Over the next five to ten years we expect this business transfer process to become a standard industry practice and believe that ProTucket will be pivotal in fostering a vibrant run-off market.”