Many insurers and reinsurers have significant portfolios of legacy liabilities and are currently focusing on the best way to manage them and achieve optimal capital efficiency, taking into account the realities of the financial climate and current market appetite for acquiring business in runoff.
Mayer Brown is at the forefront of legal solutions for the run-off market and is exceptionally well-positioned to advise clients on the optimal management of their legacy liabilities. We have built up particular expertise in providing a complete “cradle to grave” service, advising clients on how to enter the run-off market, manage their discontinued operations and ultimately on how to achieve appropriate exit strategies.
Some of our experience includes:
- The purchase and sale of run-off portfolios.
- The outsourcing of the run-off of portfolios or of the underlying information technology operation.
- The commutation of books of business or individual contracts.
- Reinsuring or retroceding legacy liabilities by stop-loss covers, adverse development cover and loss portfolio transfer arrangements.
- Part VII business transfers under the Financial Services and Markets Act 2000, whether used to consolidate the business of various group companies into one entity to separate out old liabilities from new business, or to achieve finality for business in runoff.
- The use of solvent schemes of arrangement which, despite some policyholder resistance to the process, is growing in popularity in the UK—interest in such schemes is expected to increase as (re)insurers from overseas jurisdictions consider utilizing them as an exit mechanism in relation to discontinued business transferred into UK entities via a Part VII transfer.
- Aggressive (but legitimate) defense of claims including posing of comprehensive questions.