Ernst & Young UK (E&Y) has launched a new insurance
run-off team to bring focus and leadership to the firm’s insurance
run-off services. Kevin Gill, a former consultant and
PricewaterhouseCoopers (PwC) UK director, will lead the team.

Insurance run-off, also known as discontinued business, is
primarily concentrated around non-life insurance, Gill told the
International Accounting Bulletin. The run-off occurs when
a company stops writing a certain line of business.

The insurance run-off market is large and growing. A survey
produced by KPMG Europe in October 2007 found the total liabilities
of the UK non-life run-off market was estimated at £32.7 billion
($63.6 billion). A survey published by PwC in February 2008
estimated the overall size of the European run-off market to be
€202 billion ($312.4 billion).

“Discontinued insurance is quite a big part of the insurance
industry these days and quite a lot of the big carriers have got it
or wish to dispose of it or do something with it… there is a
growing market in people wanting to buy run-off and there’s lots of
capital coming into the marketplace,” Gill said.

Changing EU legislation, particularly the Third Non-Life Insurance
Directive, has created more opportunity for movement in the
insurance run-off market within Europe.

“You should start to see companies in Germany and the like moving
run-offs to the UK. The UK is the centre of excellence for dealing
with run-off business and there are some more restructuring
techniques available in the UK to help close run-offs,” Gill

The UK member firms of KPMG and PwC also have dedicated insurance
run-off practices, Gill noted, however E&Y’s new group has a
slightly different focus. “Both KPMG and PwC have grown [their
run-off practice] out of their insolvency departments – starting
with restructuring insolvencies and moving into the solvent
reconstruction market,” he explained. “Essentially E&Y have
done it differently across the whole firm. There is some in
insolvency, some in M&A and some in regulatory areas. I will be
bringing it into one area, but from our point of view we are
putting ours in the transaction advisory side, very much from a
solvent advisory basis.”

Carolyn Canham and Nicholas Moody