Best’s Special Report: Non-Life Run-Off Insurers Illustrate a Changing Reinsurance Landscape

OLDWICK, N.J.--(BUSINESS WIRE)--The role of companies specializing in run-off transactions has morphed into being a key strategic capital partner for the insurance sector, helping companies to optimize capital, simplify operations and refocus on core business, according to a new AM Best report.

While the non-life run-off insurance sector continues to exhibit a healthy volume of transactions, its composition has grown increasingly concentrated among a handful of dominant players. Historically, run-off transactions were executed primarily by the largest insurers and reinsurers, with a focus on acquiring and managing discontinued or non-core books of business. Over time, a distinct class of run-off specialists have developed, carving out a well-defined niche in the insurance ecosystem.

“Today, these specialists are increasingly recognized for their technical sophistication, transactional agility, and ability to provide customized capital solutions,” said Dan Hofmeister, associate director, AM Best.

The report debunks a common misconception that run-off specialists primarily take on problematic or high-risk portfolios. While many acquired liabilities do pose challenges to the original insurers, the specialists gain critical advantages in the transaction process. Many are able to reprice the risk, include buffers for adverse reserve development, and, in many cases, set explicit caps on liability exposure. This underwriting discipline is supported by increasingly sophisticated data analytics, accumulated claims experience, and refined reserving methodologies.

However, despite the promise of providing significant capital relief and simplifying operations, cedents in these scenarios need to be mindful of the execution risks that can materialize. This can be particularly evident in complex transactions involving legal entity transfers or jurisdictional regulatory approvals, which can delay or even derail deals. “Cedents may also face reputational risk if policyholders or claimants perceive the transfer as a retreat from obligations, especially in high-profile or long-tail liability classes,” Hofmeister said.

The report also noted the potential for counterparty risk—if the run-off specialist becomes financially impaired or fails to manage claims prudently, which can lead to disputes, reputational fallout, or even residual liability exposure.

Over time, with the emergence of dedicated run-off specialists, the scope and structure of transactions have broadened significantly. Cedent priorities have also shifted. Legal finality was historically the dominant driver of run-off activity, but many insurers today are increasingly focused on achieving capital relief. This shift gives run-off acquirers greater flexibility in structuring solutions tailored to regulatory and capital objectives, according to the report.

To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=361492.

A video discussion of this report is available at http://www.ambest.com/v.asp?v=ambnonliferunoff226.

AM Best will also host a briefing on the run-off market on Wednesday, Jan. 14, 2026, at 11:00 a.m. EST. The briefing, titled, “AM Best’s Market Briefing – Non-Life Run-Off: An Evolving Market,” will touch on recent research insights, notable activity over the past year and expectations for 2026. Joining the panel with Hofmeister will be Raj Bohra, executive vice president, Gallagher Re; Andrew Ward, partner, PricewaterhouseCoopers LLP; and Anguel Zaprianov, executive vice president, Enstar Group.

To register for the briefing, click here.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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