France to see significant acceleration of run-off activity
Imminent introduction of Solvency II will act as a trigger for
the legacy insurance market in mainland Europe.
The size of the non-life European run-off insurance market is
estimated at €247bn, according to PwC. Of this, France and the
Benelux countries account for around €41bn.
However, transactional activity in the sector has been
relatively modest in continental Europe. Although the last six
months have seen a noticeable increase in the number of deals in
Germany, this has not been the case in France, in spite of the fact
that French insurers and reinsurers hold a significant amount of
liabilities in run-off on their balance sheets. These liabilities
are mainly managed in-house, although we have seen some disposals
We expect 2016 to be the year that this is set to change. With
the arrival of Solvency II, many companies – especially
medium or smaller insurers – will have to reconsider their
business models in in light of the new regulations and assess what
they mean for their business. The benefits of optimising the
management of legacy business, or of organising the sale of certain
books of business in run-off, will become more obvious in terms of
capital requirements. This will translate into a greater
focus on legacy business and an increase in the number of
transactions in this field.
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