Run-off vendors are becoming 'increasingly sophisticated'

Vendors of insurance companies in run-off are becoming increasingly sophisticated in the way in which they set about disposing of these businesses, according to run-off specialist Omni Whittington.

Richard Whatton, a director of Omni, said that during the last four years, he had seen a major shift in the rationale behind decisions to sell insurance businesses: “Four years ago, companies tendered for sale were mostly owned by disinterested and sometimes distressed parents. The other common scenario was that the business to be disposed of was an unwanted fall-out from a merger or acquisition.”

“Today the market is more sophisticated as marked by the growing number of subsidiary companies or discontinued portfolios being tendered. In most cases, the parent companies are viable insurance entities that are still trading but see value in cutting off non-core lines of business.”

He added: “The sale process is also becoming much more of a market test of sale value compared to the costs of retention and managing the exit in-house by one of the slower, potentially riskier, but ultimately possibly more rewarding financial exit strategy.”

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