Unlike in the UK, where the well-established, much-used Part VII mechanism provided via the Financial Services and Markets Act 2000 has long permitted successful portfolio transfers, the scope for carriers in the US to be able to shed themselves of legacy liabilities that weigh heavy on their balance sheets has been much more restricted.
But with an increasing number of US states now introducing more innovative insurance restructuring mechanisms, akin to the portfolio transfer provision in the UK, this is set to change.
Andrew Rothseid, our head of legacy, spoke to Insurance Day about the clear opportunities this brings for carriers. They can explore and take advantage of innovation and new US regulatory mechanisms – including Insurance Business Transfer (IBT) approvals - that can provide finality of balance sheet separation for liabilities that continue to develop adversely over time – not to mention carry higher costs in the form of management time as well as capital that can’t be redeployed.
Please note that this article was first published on 04 October 2021 by Insurance Day as a special ‘Viewpoint’ article and is shared with their kind permission.
