Legacy solutions key for captive management

Captive managers need to spring clean their books of business to remove or manage anything too old, the Bermuda Captive Conference has heard.

A panel discussion on how to strengthen a captive by exploring legacy solutions pointed out that there is currently $960 billion in non-life run off liabilities, with $464 billion in North America, $319 billion in Europe and $177 billion in the rest of the world, according to an 2022 estimate by PwC.

The panel consisted of Alex O’Shea, vice president of M&A, Enstar, Charlie Thresh, head of financial advisory, Teneo Bermuda and Dan Linden, head of M&A, Fleming Re, with John West, SVP, legacy solutions, Guy Carpenter moderating.

The panel agreed that legacy solutions can allow the captive to concentrate on the road ahead and not keep one eye on the rear-view mirror, removing some things that can often come up at board meetings.

Runoff business can include business that is no longer core to a captive’s strategy any more, inherited liabilities from or a parent, or discontinued lines of business.

The panel ran through the various mechanisms that can be used to supply such legacy solutions, that included novations, loss portfolio transfers and stock acquisition.