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Directory of Run Off Service ProvidersHow to search the Directory
Service providers are listed alphabetically and also indexed by category in the column on the right. Click on a category for a list of relevant firms, or click here for the full A-Z listing.
Foreword to the DirectoryA time for innovation
Dan Schwarzmann, partner with PricewaterhouseCoopers, takes a positive view of developments in 2009 and looks forward to another year of innovation in the run-off market
 2009 has been another very interesting year for insurance and reinsurance run-off. Amidst the challenging economic environment that has seen the wider financial services sector impacted adversely, the run-off industry has seen a significant amount of positive activity. This yet again proves it remains a market where, with continued innovation, stakeholders can benefit from enhanced returns and certainty.
On this note, it is interesting to look back at some of the major events of 2009 – which we have been involved with – and how these have impacted the run-off market.
The Part VII transfer of the 1992 and prior liabilities of Lloyd’s Names represents one of the largest and most complex restructurings the market will ever see. This solution brought finality to hundreds of years of open-ended Names’ liabilities whilst at the same time providing policyholders with US$1.3 billion of additional reinsurance protection. From an innovation perspective, it also saw the first use of a pre-directions hearing to deal with the extent of notification required for policyholders. This demonstrates that, even for a very mechanistic legal process, the Court is receptive to alternative solutions focused on assisting parties to a transaction.
Solvent schemes of arrangement continue to cause widespread market debate with the recent Scottish Lion judgment being at the forefront of everyone’s minds. It has been interesting to see how the legal community has reacted to this decision. Some commentators believe that the ruling makes further solvent schemes impossible, whilst others believe it has no impact at all. What is clear however, is that Lord Glennie was ruling on solvent schemes of arrangement generally and that this pre-sanction hearing did not consider the specifics of the Scottish Lion scheme. As such, Lord Glennie’s ruling that there must be ‘a problem’ before a solvent scheme of arrangement can be proposed is causing confusion. At the time of writing this foreword the appeal is about to be heard and hopefully the Appeal Court will clarify this matter shortly.
On the subject of schemes, the Highlands UK scheme of arrangement demonstrated that scheme innovation continues to deliver significant value for stakeholders. In this scheme, the direct policyholders gave up their rights against both Highlands in the UK and, interestingly, against Highlands in the US in order to resolve a complex and long-standing legal dispute between the UK and US companies. The use of a UK scheme to bring finality to two entities in different jurisdictions represented another new idea in the run-off sector and, yet again, demonstrated that policyholders and cedants are receptive to value enhancing deals.
Despite the current economic climate and lack of new debt, activity remains strong in the acquisitions and disposals market. For example, the last 12 months have seen a number of significant transactions completing, including Unionamerica, Alea and Copenhagen Re, and there are more to come.
This is just a taster of the activity in 2009. However, one of the interesting aspects of these diverse transactions is that, more than ever, careful preparatory work is needed if the true value of the transaction is to be clear to both sides. They also demonstrate that capital can be released from very complex structures.
It is already evident that 2010 is going to be another exciting year in the run-off sector. In particular, the impact of Solvency II is now a very clear focus for many players. For this significant reason, and because of the value trapped in the run-off market, I expect to see innovation in nearly all areas. So there is much to be positive about in 2010, and I am personally looking forward to what promises to be another very interesting and eventful year in the run-off market.
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