Garry Nelson, of runoff manager Devonshire Group, examines the realities for U.S. companies facing runoff and current options…

Solvent Insurers and Reinsurers – Caught Between A Rock And A Hard Place

As the 21st century unfolds, solvent (re)insurers with significant run-off portfolios are increasingly finding themselves “between a rock and a hard place.” On one side are the many challenges inherent in run-off operations – conflicts with the demands of ongoing operations, difficulties in staff motivation and retention, mounting administrative costs, supporting a runoff infrastructure, legacy systems headaches, regulatory compliance and internal control issues, and the very real challenge of managing day-to-day operations. On the other side, management faces a veritable mountain of yet-unknown claims that can explode into huge liabilities. As time marches on, more claimants are recognized and reserves pale in the face of emerging losses and ever increasing actuarial IBNR estimates. read more

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Runoff: New Strategies For An Old Business

The term "runoff" has been around for years. It originated in the insurance and reinsurance industries as a means to distinguish between canceling contracts on a cutoff basis (the (re)insurer liability is cut off after policy termination) and canceling contracts on an ongoing or runoff basis. In the latter case, losses are handled by the (re)insurer until the ultimate conclusion of all activity on a particular contract. In the past 15 years, the term has expanded to denote not only the runoff of a particular contract, but also that of an entire book of business or even of the insurance or reinsurance company itself. read more