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Legacy deal activity to remain at record levels: PwC

23rd February 2021 - Author: Matt Sheehan

New data from PwC shows that participants in the legacy re/insurance market expect deal activity to remain “at record highs” this year, with the US and Lloyd’s markets set to be particularly busy.

business-growthRespondents to PwC’s Global Insurance Run-off Survey reported that predicted growth in the legacy market materialized over 2020, boosted by significant investment in both new and existing legacy players.

And the market has maintained its momentum, with over 100 legacy deals publicly announced since the last survey, consistent with the volume in the prior period.

This year, respondents indicated that they expect the sector to be heavily influenced by factors such as increased levels of capital availability and hardening live market conditions which will ensure a strong supply pipeline over the next two years.

Overall, PwC estimates that the global run-off reserve has increased from approximately $791 billion to $864 billion, representing a 9% increase over the previous year.

While the North America region continues to dominate the global run-off market, with reserves of $402 billion, the UK and Continental Europe markets have a combined reserve of $302 billion.

Estimates of the run-off liability in other key territories, including Asia, the Middle East and South America, have also increased to $160 billion.

Notably, only one in ten respondents to PwC’s survey indicated that they believe the market has reached maturity, suggesting that legacy management will continue to grow as it integrates itself into the traditional insurance life cycle.

“The legacy market has never been as active as it has since our last survey, both from a deals perspective, but also from a legacy management perspective within groups,” said Jim Bichard, Global Insurance Leader at PwC UK.

“More of our professionals than ever are involved in providing insights and services to the market and we can only see this continuing to expand as the market evolves and develops.”

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