The amount of capital tied up in run-off has increased appreciably in non-life insurance since 2004, a new survey has found.
The annual UK Run-Off survey, Life and Non-Life Insurance 2006, by KPMG LLP (UK), and commissioned by The Association of Run-Off Companies Ltd (ARC), has revealed that in the UK non-life run off market, total liabilities at the end of 2005, including Lloyd's syndicates, were estimated at £38.2bn, a reduction of £0.2bn on 2004 figures.
However, funds tied up in run-off have increased by 20% from £4bn to £4.8bn.
KPMG said the market was substantial and the drive to more actively manage these books of business was evidenced by the continuing use of solvent schemes to achieve finality as well as the growth in the use of Part VII transfers.
Tony McMahon, partner in the KPMG Restructuring Insurance Solutions practice commented: “Even though British Aviation Insurance Company (‘BAIC') failed to obtain court sanction for its solvent scheme last year, schemes continue to grow in number, size and complexity.
“Solvent schemes are now a material feature of the non-life run-off market and those promoted but not effective before the end of 2005 account for some £500 million of liabilities.”
The survey, which includes Lloyd's business but excludes the UK business of companies from other EU countries, found the total liabilities of the Lloyd's run-off syndicates had reached £7.5bn
