David Luce, a Partner with Willkie Farr & Gallagher LLP moderated a panel that examined the new entrants in the run-off market buy-side, recent M&A activity, and market entrances and exits. The panelists also discussed the motivation of private equity in run-off, and the impacts of private equity firms taking ownership of certain major players. The panelist included Will Bridger, Group CEO, Compre Group, Ben Kaplan, Director, BCI, Phillip Drewer, VP Head of Restructuring, Zurich Legacy Solutions, and Hugo Kostelni, Managing Director & Global Risk Solutions Practice Leader at Guy Carpenter. A replay of this presentation is available to members through the AIRROC On Demand platform.
Some of the key takeaways:
- The market is evolving and changing dramatically. The buy-side continues to grow and is robust with opportunities presented by heightened competition from newer players and the influx of alternative capital sources.
- The solution set is changing, particularly over the last three years. There is a convergence of live and legacy that is ever increasing with the market providing capital liability solutions for prior years development. The focus is on providing a certainty of cash flow and more of a capital optimization than a discontinued liability portfolio.
- From the cedent’s perspective, these transactions are no longer taboo or viewed negatively but rather are seen as more of a strategic buy. They are considered a capital management tool applying retroactive solutions to help solve prospective issues; freeing up capital to write new business.
- Private equity sees the legacy space as an enticing form of patient capital that is part of the maturation process, to help support and oversee the growth of companies that will be at the forefront of the industry. The three to five year private equity timeline is no longer applicable and is being replaced with longer duration capital. The legacy space is a better fit for the private markets as opposed to the public markets. The public markets focus and reward, growth for growth’s sake, which can create misaligned incentives.
