It may have passed you by, but there’s been a bit of a fuss about New Zealand recently.
Despite the country’s recent but well-established association with hobbits and Middle Earth, via Peter Jackson’s The Lord of the Rings film franchise, it has emerged that the nation has repeatedly been left off maps – including those at the Smithsonian National Museum of Natural History, Central Park Zoo, Starbucks and Ikea.
It turns out that in the cartography world, the home of 4.7 million people has been a bit of an afterthought.
Led by Prime Minister Jacinda Ardern, the country has launched a tourism campaign to raise awareness of its existence. That’s right, #getnzonthemap is a hashtag that actually exists!
New Zealand’s plight reminded me somewhat of our own fair legacy market.
For years it has soldiered on, cleaning up the live market’s unwanted business and dutifully fulfilling claims obligations on behalf of others. It has its own merits and its own successes. And yet, it has never been the centre of attention.
But that has changed – and more than ever in the past 12 months.
The live market is fully recognising the virtues of run-off. Legacy has finally made the transition from a dirty word to a capital optimisation tool, and more and more live businesses are queuing up to have their legacy needs seen to.
Private equity has woken up to the fact legacy carriers can make double-digit – yes, double-digit – returns and are now looking for any which way in.
Live carriers are even looking to make their own investments, because they certainly aren’t making much money in their own business.
Legacy is having something of a “moment” and the results of our latest annual survey certainly show that.
The market is optimistic about its prospects. No survey respondent believed that the next 12 months would be worse than the year before.
However, it would be misleading to say the legacy market no longer faces any uphill struggles. When you read ahead, what you will find are two parts to the tale.
Continental Europe is still seen as the prime opportunity, and while Brexit hasn’t triggered the sale of many liabilities to date, the expectation is it certainly will.
Meanwhile, in the US, the sentiment around the opportunity has tempered. Last year’s enthusiasm over Rhode Island’s new, but still untested, transfer framework is waning. With no deal in the state having yet been executed, confidence in the legislation is wavering and attention is turning to other US states.
The challenge for legacy companies is how they will navigate the opportunity in the market. The influx of capital is increasing competition and narrowing deal margins – and being selective on which deals to fight for will be crucial.
No market is ever without uncertainty, but at least one thing is for sure: 2018 is the year when legacy has found itself firmly on the map.
To view the Legacy Supplement 2018, please click here.
Enjoy the read!
Catrin Shi, News Editor, The Insurance Insider
