Introduction: Capital opportunities for captive insurers with legacy liabilities
Many (re)insurance companies carry legacy liabilities on their balance sheets that no longer align with their current strategic goals. This practice is equally relevant to captive insurance companies. Such legacy liabilities, whether in run-off portfolios, discontinued lines of business, or aged claims, tie up capital, limit operational flexibility, and hinder the efficient deployment of resources for current and future underwriting opportunities.
Fortunately, a range of solutions exists to help insurers transfer, mitigate, and/or achieve finality on these legacy exposures. These strategies vary in complexity, nature of finality, and regulatory involvement, but all share a common goal: improving capital efficiency and strategic alignment. The following table summarizes the key exit solutions commonly used in insurance.1
