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36 RUN-OFF

Reinsurance Practice and the Law

Chapter 36 RUN-OFF INTRODUCTION 36.1 One of the recent noticeable features of the London market has been the significant increase in reinsurance companies and Lloyd’s syndicates which have decided to cease writing new business and have put themselves (or part of their operations) into run-off. This increase in the number of run-offs shows that it is now an established market in its own right in the UK. Furthermore, the number of companies in run-off is likely to increase substantially across Europe following the scheduled implementation in 2016 of the European Union Directive, Solvency II, 1 which is a fundamental review of the capital adequacy and solvency requirements of the insurance industry. The expansion of the run-off market has generated a number of legal and practical questions which are discussed in this chapter. In particular, we examine separately the problems faced by reinsurance companies, reinsurance pools, Lloyd’s syndicates and Lloyd’s brokers. There are common run-off considerations which face all of these entities but each of them has aspects which are distinctive.

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