2018年-普华永道全球_Non-life_run-off_in_the_the_US_Is_the_US_market_poised_for_a_transaction_surge__2页_536kb

Non-Life Run-off in the US Summary

Core Content

The PwC Global Run-off Survey, launched in January 2018, highlights the US as the largest single discontinued non-life insurance market globally, with an estimated value of US$335 billion. The survey focuses on the current and future state of non-life insurance run-off and legacy management in the US, identifying key trends, priorities, and anticipated exit mechanisms.

Main Views and Key Information

Board Engagement and Priority

• Board Priority: 68% of US respondents indicated that run-off has a medium or high priority on their Board's agenda, showing a marked positive shift in engagement compared to previous years.
• Key Objectives: The most frequently cited run-off objectives were securing early finality and managing claims volatility. These reflect the continued reliance on reinsurance solutions for legacy deals.
• Orderly Run-off: Less than 20% of US respondents cited orderly run-off as their key objective, contrasting with European respondents and suggesting a more proactive approach to legacy management in the US.

Exit Mechanisms and Market Outlook

• IBT Anticipation: 41% of US respondents expect to use Insurance Business Transfer (IBT) as an exit mechanism before the end of 2019, despite only Rhode Island having fully implemented IBT regulations and Oklahoma expected to follow by the end of 2018.
• Other Exit Options: 27% anticipate a sale, 22% expect reinsurance, and 10% foresee re-domestication of business.
• Restructuring Activity: Over two-thirds (67%) of US respondents believe they will be involved in restructuring activity in the next three years, though this is less than the likely amount in Europe, where Brexit is a major driver.

Transaction Outlook

• Transaction Numbers: Both US and non-US respondents expect a similar number of run-off disposal transactions in the US over the next two years, with a quarter anticipating over 20 transactions.
• Deal Size: US respondents predict smaller deal sizes compared to the historical trend of high-value reinsurance deals, suggesting a potential shift towards mid-market transactions.

Lines of Business to be Disposed

• Main Lines: Property & Casualty, General Liability, and Workers' Compensation are the most likely lines of business to be disposed of in the US over the next two years.
• APH Liabilities: APH (Accident and Health) liabilities may also be central to US run-off deals, especially if IBT or division statute initiatives offer routes to full legal finality.

Regulatory and Market Development

• Regulatory Initiatives: Several states have introduced regulatory initiatives to facilitate exit from legacy insurance portfolios, including Oklahoma's IBT regulations and proposed division statutes in Georgia, Connecticut, and Illinois.
• Momentum: The UK's experience with Part VII transfers suggests that once the first transactions occur, momentum can develop quickly in the US market.
• Anticipated Changes: US respondents identified several areas they would like to see improved in the run-off market, including regulatory improvement, commutations, dispute resolution, broker knowledge, finality mechanisms, lower costs, reputation, fewer intermediaries, and capital recycling.

Conclusion

The US non-life run-off market is at a critical stage of development, with increased Board engagement and a growing interest in using IBT and other regulatory tools for exit. While the market has not yet seen a landmark transaction, the anticipated use of IBT and the expected restructuring activity suggest a potential surge in activity. The focus on smaller deal sizes and specific lines of business indicates a shift in strategy and a more mature approach to managing legacy portfolios.