In this video interview with The Insurer TV, Ed Hochberg, Guy Carpenter’s Head of Global Risk Solutions, describes how favorable underwriting conditions in the live market were continuing to create demand for legacy products.
“Companies are looking at their reserve portfolios as means to generate additional capital, by reducing the amount of capital that is devoted to the back books and then being able to deploy that for prospective opportunities,” he said. “It's driving demand and I think we're going to continue to see that for the foreseeable future.”
Ed went on to describe how he expects the trend of large transactions coming to market to continue as run-off solutions become “more mainstream” and larger companies grow more comfortable engaging with legacy counterparties. He added that he believes there is a “sweet spot” for transaction size, which he estimates as being between USD 500 million to USD 1 billion.
“There isn’t any magic to it, but it's probably because if you bring a transaction of that size to the market, it's big enough that it will get players out of bed and there'll be enough legacy players that would be able to have a look at it and have the capacity to do it,” he explained.
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