Non-life insurance run-off deals review Q1 2023

Of the deals announced in Q1 this year, notably three comprised the transfer of more than $1bn of reserves each, totalling $4.7bn in aggregate. The trend towards larger and more complex deals continues to be a consequence of sellers being highly motivated to release capital at scale and optimise opportunities and returns elsewhere in their business through strategic redeployment of the capital released. Furthermore, AM Best recently maintained its negative outlook on the UK’s non-life insurance sector citing rising claims costs stemming from high inflation, hardening reinsurance rates and the prolonged period of weak economic conditions as factors squeezing insurer margins. Such conditions are likely to contribute to ongoing deal supply into the run-off market. Also of note is that these three large deals in Q1 involved portfolios containing a wide variety of risks underwritten in major territories with two of the deals, involving Enstar / QBE and Compre / SiriusPoint, comprising both Lloyd’s and company market business in the same transaction.

The reinsurance to close (“RITC”) season at Lloyd’s also contributed to Q1 activity, with RiverStone International in particular executing five transactions, headlining its activity with a c.$1.5bn RITC and loss portfolio transfer (“LPT”) of MS Amlin’s syndicate business. Marco also grew its Lloyd’s platform in the period, taking on a UK motor book from Markel containing a mix of settled periodic payment orders (“PPOs”) and unsettled potential PPOs.

Whilst capital efficiency and optimisation is rightfully at the forefront of participants’ minds, with transaction complexity increasing, there are wider considerations for sellers and buyers alike to really drive value out of transactions executed. We are increasingly being asked to provide not only comprehensive deal process management and pricing advice, but also specific support around transaction planning, corporate restructuring, information presentation, accounting and tax implications, regulatory interactions, resource and people issues, systems/data migration and integration as well as achieving operational efficiencies post-transaction, for example through the use of developing technologies.

Careful planning is therefore needed before and right through the transaction process and our experience and breadth of expertise has added significant value across the transaction lifecycle. So whether you are considering a transaction, at the deal process management stage or are contemplating how to drive value from your deals, please get in touch with us.