A wave of run-off activity is expected in 2018 as re/insurers in Europe adjust to Solvency II and seek to minimise capital requirements through optimising management of legacy business or selling books of business in run-off, according to Clyde & Co.
The arrival of Solvency II was expected to bring a greater focus on legacy business for European re/insurers.
However, so far firms’ have prioritised other aspects of regulatory and legislative demands such as the Insurance Distribution Directive, impending General Data Protection Regulations and new anti-money laundering requirements.
“Many re/insurers in continental Europe have a sizeable number of contracts in run-off.
“Overall, the size of the European run-off market is estimated to be around EUROS 247 billion, of which France and the Benelux countries account for EUROS 41 billion, according to PwC.
“Management of this business is quite demanding in terms of the specific expertise it requires, as well as the demands it places on capital, immobilising funds and resources that could be used elsewhere,” Clyde & Co explained.
Clyde & Co believes that with firms now having worked to re-adjust other areas of business they will turn their attention to run-off activity and legacy lines of business to drive efficiency in capital management.
