Click here to download the Legacy Roundtable and Survey 2024
Journalists tend to like extremes.
They can make for eye-grabbing headlines, clear narratives and rock-solid news angles.
But sometimes, the story isn’t always about the extremes. Sometimes, the story is about the subtle changes.
And in legacy, there is certainly a subtle sea change in sentiment from last year.
It has been a boom time for legacy in recent years, with billions of dollars’ worth of liabilities coming to market as the live carriers seek to deal with adverse development and optimise their capital in an improving market.
Deal sizes have been getting bigger and bigger, and the billion-dollar legacy deal is no longer that much of a rarity.
It has been a time of opportunity and optimism. And while that sentiment on the whole prevails, there is a dose of realism and caution which has come about since the last time the legacy market gathered down in Brighton’s The Grand hotel for the annual IRLA Congress.
In the last 12 months there have been negative headlines around the need to plug major reserve holes at some legacy acquirers, and sales processes for others being shelved amid lacklustre interest.
Meanwhile, a recent and very public court dispute between a seller and a legacy acquirer around the legitimacy of a signed deal cast a cloud over the sector – although, as our survey results show, there is still robust interest from cedants in doing transactions.
Deals are still being brought to market, but many are being left on the table, as legacy acquirers exercise extreme caution under the spectre of social inflation.
Expectations between seller and acquirer have widened in terms of deal economics and structures.
And while all of this suggests a level of discipline in the run-off market, acquirers are also treading a fine line between protecting their P&Ls and demonstrating ongoing relevancy to their clients – who are battling with a structural and cultural phenomenon in US liability lines which doesn’t appear immediately fixable with rate and form.
Our legacy roundtable featured a broad discussion which ranged from deal-flow predictions to pricing dynamics, from new opportunities to emerging threats.
The tone was again optimistic overall, but the froth has come off a little since last year. And given the rapidly changing dynamics in both the live and legacy markets, that’s not necessarily a bad thing.
Sometimes it’s the subtle shifts in sentiment and strategy which can be the most impactful further down the line.
Read on for our survey results and some highlights of our conversation at the IRLA Congress in Brighton, and thank you to Gallagher Re for the opportunity.
Catrin Shi,
Editor-in-Chief, Insurance Insider
Click here to download the Legacy Roundtable and Survey 2024