《传统和LPT.pdf》由会员分享,可在线阅读,更多相关《传统和LPT.pdf(12页珍藏版)》请在三个皮匠报告上搜索。
1、The MarketMarket Active and Poised for GrowthRecent market activity Steady deal volumes and growing investor interest in non-life run-off market 2022 disclosed deals have exceeded$8bn,but true number is higher$4bn of transactions announced in the first two months of 2023 potential to be a banner yea
2、r Significant growth capital has entered the market in recent years:Carlyle(Fortitude Re)Cinven/BCI(Compre)CVC(RiverStone International)Oaktree(Marco)777 Partners(777 Legacy)Maiden(Genesis Legacy Solutions)Apollo(Catalina)Established market players such as Enstar have also continued to tap public ma
3、rkets for additional capital to fund growth1,2106301,2551,9053,07505001,0001,5002,0002,5003,0003,500200212022Capital raised($m)Non-life LPT/ADC Market Capital Raises 2018-2022 YTD,by Capital TypeDebtEquityGrowth capitalSidecarTotalFigures sourced using Aons Non-life LPT/ADC Transactions d
4、atabase which includes publicly disclosed deals and Aons estimates of deal size where no value is publicly stated.Figures sourced using Aons Non-life LPT/ADC Capital database which includes publicly disclosed capital raises and Aons estimate of growth capital committed for capital inflows to LPT/ADC
5、 specialists only0002,0004,0006,0008,00010,00012,0002002120222023 YTDTotal TransactionsTotal Ceded LiabilitiesNon-life Legacy Market Deals2018-2023 YTD by Deal StructureADCLPTShare SalePortfolio TransferTotalMarketOwnershipComments on appetite777 Legacy777 Capital Partners$200m
6、 target deal size.New reinsurer.AllianzListed$100m target deal size.Typically focussed on workers comp,construction defect business.Berkshire HathawayListed:NYSECapacity for the largest deal sizes.Generally prefers less competitive legacy processes.Carrick HoldingsSequentis(at present)$200m target d
7、eal size.Middle of a recapitalisation.Catalina HoldingsApolloNo longer participating in competitive processesCompre GroupCinven/BCI$500m target deal size but have proven to do larger deals(up to$1.5b)Darag GroupAleph/Crestview/Keyhaven$200m target deal size.Enstar GroupListed:NASDAQCapacity for the
8、largest deals sizes.Fleming ReAltamont$100m-$200m target deal size.Fortitude ReCarlyle/T&DCapacity for the largest deal sizes.Genesis LegacyMaiden Holdings$100m-$200m target deal size.Marco CapitalOaktree$500m target deal size.Potential capacity for larger deals.Munich ReListedCapacity for the large
9、st deal sizes but typically only involved in heavily structured deals.May support another specialist market with retro capacity.Premia HoldingsArch/Kelso$500m target deal size.Potential capacity for larger deals.Quest GroupManagement$100m target deal size.No real capacity for larger deals.R&Q Legacy
10、Listed:AIM$500m target deal size.RiverStone InternationalCVC CapitalCapacity for the largest deal sizes.Swiss ReListedCapacity for the largest deal sizes.Typically heavily structured deals.At least 18 Dedicated Legacy Markets and ReinsurersMarket AppetiteMotivationsRelease trapped capitalReturn exce
11、ss capital to investors Redeploy capital to more profitable operationsRegulatory or rating agency capital reliefDiscontinued operationsSoftening market conditions ESG and Inflation concernsEconomic,administrative and legal finalityLPT/ADC OptionsAdverse Development CoversLoss Portfolio Transfers(LPT
12、)Hybrid LPTsCommutationsNovationsSalesInsurance Business Transfer(IBT)/Part VII TransfersSummary of LPT/ADC Options8Proprietary&ConfidentialWhy transfer loss reserve liabilities?8Proprietary&ConfidentialRationale:The benefits of a reinsurance cover on loss reserve liabilities have existed for many y
13、ears,but the timing to transfer loss reserves has never been better due to the current high interest rate environment,record capital in the loss portfolio transfer/adverse development cover(LPT/ADC)reinsurance market and long-lasting capital benefitHigher Risk-Free RatesThe fair value of loss reserv
14、e liabilities is driven by the1.LPT/ADC specialists assessment of reserve adequacy and expected volatility;2.Risk-free interest rate used to discount the liabilities over the expected payout period;and3.Value that can be gleaned from claims if claim handling is transferredCurrent U.S.Treasury yields
15、 range from 3.6%to 4.9%(depending on duration),which has resulted in attractive proposals to transfer liabilities Record CapitalThe total number of dedicated LPT/ADC specialists is 14,who join traditional reinsurer/LPT/ADC specialist Allianz and Berkshire Hathaway,with renewed interest from Munich R
16、e,and Swiss ReAon estimates capital supporting dedicated LPT/ADC specialists exceeded$20 billion in 2022,up from$6 billion in 2016Benefits of LPT/ADC Reserve TransferSignificant capital benefit that lasts the duration of the payout patternCalendar year earnings protection from prior-year development
17、Hardening Rate Market Pricing conditions for reinsurance and commercial lines have seen up to double digit increases allowing carriers to improve underwriting performanceLarge potential for higher return on capital for transferring UY 2017 2020 business and replacing with todays current opportunitie
18、s Transaction LifecycleSubmissionDue DiligenceIntent LetterAgreementsRegulatory ApprovalsPricing the Transaction ActuarialExpected ultimate losses,required reserves and payment patternProject range of possible outcomesCalculate the fair value of the reservesClaims and FinancialGround up claim review
19、Runoff administration analysisCash flow modelingReinsurance AssetsQuality of counterpartiesCollectability of Reinsurance AssetDisputes,ArbitrationsAccounting&Legal ConsiderationsStatutory Accounting Considerations*GAAP Accounting Considerations*Statutory Accounting ConsiderationsLegal&Regulatory Con
20、siderations*Ability to secure regulatory approval*Ability to structure the transaction to secure desired legal outcomePost Deal Operational ConcernsPortfolioTransitionData migration needs for historical claim filesStaffing decisionsTPA contract decisionsOnboarding employeesDealImplementationClaims service level agreements/Delegated authorityClaim Payment MechanismsLoss FundTimed Bordereau Based Funding RequestsValue CreationStaffing claims with subject matter expertsReevaluating exposures and creating custom resolution plansReserve salvage