Why Reinsurance Transactions for Runoff Are Not Well Understood

 
Captive Use Trends & Innovations | Steven McElhiney | President & CEO | EWI Re, Inc.

According to Steve McElhiney, president and CEO of EWI Reinsurance, reinsurance transactions for runoff are generally not well understood. Mr. McElhiney says there is a perception that runoff deals involve failed companies and failed transactions. In fact, runoff has evolved to be a key strategic tool where a highly rated company can use runoff tools to exit a discontinued line of business or free up capital and resources. The common tools used for runoff transactions include commutations, loss portfolio transfers, and assumption agreement (novation). Runoff transactions can typically be completed in a relatively short time frame and are generally straightforward; however, they involve a different scope and nature as well as unusual terminology.