Non-life run-off specialists have moved well beyond their traditional role as managers of discontinued books and are now viewed as core strategic capital partners for insurers, according to a new report from the credit rating agency AM Best.
The ratings agency notes that these firms are increasingly helping insurers release capital, simplify group structures, and sharpen their focus on primary underwriting activities.
AM Best highlights that transaction volumes in the non-life run-off market remain solid, but activity is becoming increasingly concentrated among a small number of established specialists. Previously, run-off transactions were largely undertaken by major insurers and reinsurers seeking to exit non-core or discontinued business. However, a group of run-off specialists has emerged, forming a clear segment in the insurance sector and playing an important role in managing insurers’ balance sheets.
“Today, these specialists are increasingly recognised for their technical sophistication, transactional agility, and ability to provide customised capital solutions,” commented Dan Hofmeister, Associate Director at AM Best.
According to AM Best, a persistent misconception is that run-off specialists mainly assume distressed or excessively risky portfolios. While many transferred liabilities present challenges for the original carriers, the report explains that specialists benefit from advantages built into deal structures.
These often include the ability to reprice exposures, build in protection against adverse reserve development, and, in many cases, impose explicit limits on liability. AM Best adds that this discipline is reinforced by advanced analytics, extensive historical claims data, and increasingly refined reserving techniques.
The report also stresses that insurers pursuing run-off solutions must carefully assess execution risk. AM Best points out that complex transactions involving legal entity transfers or multi-jurisdictional regulatory approvals can encounter delays or fail to complete altogether. “Cedents may also face reputational risk if policyholders or claimants perceive the transfer as a retreat from obligations, especially in high-profile or long-tail liability classes,” Hofmeister added.
AM Best further cautions that counterparty risk remains a relevant consideration. If a run-off specialist experiences financial weakness or fails to manage claims appropriately, cedents may be exposed to disputes, reputational damage, or residual liabilities, particularly in structures where risk transfer is not absolute.
As outlined by AM Best, the expansion of dedicated non-life run-off specialists has widened both the scope and objectives of transactions. Where legal finality once dominated decision-making, insurers are now more frequently prioritising capital relief. AM Best observes that this change has given run-off acquirers greater flexibility to design transactions aligned with regulatory requirements and capital efficiency goals.
The AM Best report places this evolution within the broader context of an industry shaped by strict regulation, complex risk profiles, and ongoing structural adjustment. Legacy liabilities, the agency notes, can become long-term financial and operational burdens, prompting insurers to seek partnerships with run-off specialists to transfer exposure and reallocate resources toward core business lines.
While run-off activity spans both life and non-life insurance, AM Best notes that most firms specialise in one segment. In life insurance, growing participation from asset managers has intensified competition, with these firms often aligning liability acquisitions with proprietary investment strategies. The AM Best analysis, however, is focused on the non-life sector, which continues to mature as insurers refine their capital and risk management approaches.
AM Best explains that non-life run-off specialists typically acquire discontinued or non-core portfolios that insurers no longer wish to retain, including legacy exposures linked to exited product lines or volatile claims development. Increasingly, these deals are proactive rather than reactive, designed to optimise capital usage, support enterprise risk objectives, or extract value through reinsurance-based solutions.
Transaction visibility in this market is high, AM Best notes, as deals are generally facilitated by a limited group of specialist brokers. This gives leading run-off firms awareness of most opportunities, even when they do not ultimately participate.
The agency adds that the operating models of these specialists, which focus exclusively on legacy claims management, often allow closer monitoring of legal developments and settlement trends than is possible for active carriers managing a wide range of current business.
Despite the benefits, AM Best emphasises that sellers must account for potential complications, including data quality issues, claims transfer challenges, and retained tail risk in partial loss portfolio transfers or adverse development covers. In such cases, ongoing oversight may still be required, reducing the effectiveness of the separation.
From a value perspective, AM Best identifies capital efficiency as the primary driver behind non-life run-off transactions. Legacy portfolios often consume significant regulatory and rating agency capital while contributing little to earnings. By transferring these liabilities, insurers can improve returns, strengthen balance sheets, and redirect capital toward growth initiatives. Operational simplification is another key benefit cited by AM Best, particularly for insurers that no longer maintain the systems or expertise needed to manage older or niche portfolios.
AM Best also points to the depth of claims management expertise within specialist run-off firms. Many have built teams capable of handling complex litigation and long-duration liabilities across multiple jurisdictions, supported by robust oversight of third-party administrators. Even where cedents retain direct claims control, AM Best notes that specialists typically play an active governance role.
At the market level, AM Best describes non-life run-off specialists as an important stabilising influence. By absorbing legacy risks, they contribute to cleaner insurer balance sheets and greater resilience during periods of regulatory change, large loss events, or shifting market conditions. Their flexibility in structuring transactions, unconstrained by traditional underwriting measures such as combined ratios, allows for a longer-term assessment of value.
The non-life run-off market remains concentrated, according to AM Best, with a limited number of global players dominating activity. What began as a response to insurer failures and complex asbestos and environmental claims has expanded into a broader market with more varied transaction structures and liability types.
Citing the PwC Global Insurance Run-Off Survey, AM Best notes that the global run-off reserve market was estimated at approximately USD 1.1 trillion at the end of 2024. While overall liability volumes have remained relatively stable, recent years have seen fewer but larger transactions, a pattern that shifted in 2025 as more small and mid-sized deals were announced.
AM Best adds that transferred portfolios are also becoming more diverse, extending beyond traditional long-tail exposures to include moderately longer-duration risks such as motor. According to data referenced by AM Best from the PwC Run-off Deals Database 2025, six firms—Enstar, Riverstone International, Premia, Compre, Marco, and DARAG—accounted for more than half of global non-life run-off transactions in 2023 and 2024, with their share continuing to increase in 2025. AM Best concludes that this growing concentration underscores the central role run-off specialists now play in supporting insurers’ capital management and long-term strategic objectives.
