Non-life runoff specialists have moved far beyond their traditional role as book managers and are now seen as core strategic capital partners for insurers, according to a new report from credit ratings agency AM Best.
The ratings agency noted that these companies are increasingly helping insurers free up capital, simplify group structures and sharpen focus on key underwriting activities.
AM Best highlights that transaction volumes in the non-life runoff market remain strong, but activity is becoming increasingly concentrated in the hands of a small number of established specialists. Previously, run-off transactions were primarily conducted by large insurance companies and reinsurers looking to exit non-core or discontinued businesses. However, a group of runoff specialists has emerged, forming a clear segment in the insurance industry and playing an important role in managing insurers’ balance sheets.
Dan Hofmeister, associate director at AM Best, commented: “Today, these experts are increasingly recognized for their technological sophistication, trading flexibility and ability to provide customized capital solutions.”
AM Best believes that a persistent misconception is that runoff experts primarily assume distressed or overly risky portfolios. While many of the transferred liabilities pose challenges for the originating carrier, the report explains that specialists can benefit from advantages built into the deal structure.
These typically include the ability to reprice exposures, establish protections against adverse reserve developments, and in many cases impose clear limits on liability. AM Best added that advanced analytics, extensive historical claims data and increasingly sophisticated reserve technology strengthen the discipline.
The report also highlights that insurers seeking runoff solutions must carefully assess implementation risks. AM Best notes that complex transactions involving transfers of legal entities or regulatory approvals across jurisdictions may experience delays or not be fully completed. “Ceders may also face reputational risk if policyholders or claimants view the transfer as an avoidance of obligations, particularly in high-profile or long-tail liability categories,” Hoffmeister added.
AM Best further warned that counterparty risk remains a relevant consideration. If the runoff specialist encounters financial difficulties or fails to manage claims appropriately, the cedent may face disputes, reputational damage or residual liability, particularly in structures where the transfer of risk is not absolute.
As AM Best outlines, the expansion of dedicated non-life runoff specialists has broadened the scope and objectives of transactions. Where legal finality once dominated decision-making, insurers are now prioritizing capital allowances more frequently. AM Best observed that this change provides greater flexibility to finalist acquirers to structure transactions in line with regulatory requirements and capital efficiency objectives.
The AM Best report places this evolution within the broader industry context shaped by tight regulation, complex risk profiles and ongoing structural changes. The agency noted that legacy liabilities could become long-term financial and operational burdens, prompting insurers to seek partnerships with runoff experts to transfer risk and reallocate resources to core lines of business.
AM Best notes that while runoff activity spans both life and non-life insurance, most companies specialize in one segment. In the life insurance space, competition is heightened by the growing involvement of asset managers, who often combine liability acquisitions with proprietary investment strategies. However, AM Best’s analysis focuses on the non-life insurance sector, which continues to mature as insurers refine their approaches to capital and risk management.
AM Best explains that non-life runoff specialists typically acquire discontinued or non-core portfolios that insurers no longer wish to retain, including legacy risks associated with exited product lines or volatile claims development. These transactions are increasingly proactive rather than reactive and are designed to optimize the use of capital, support corporate risk objectives or extract value through reinsurance-based solutions.
AM Best notes that transaction visibility in this market is high as transactions are typically facilitated by a limited team of professional brokers. This makes the leading finalist companies aware of most opportunities, even if they don’t ultimately participate.
The agency added that these specialists’ operating models focus exclusively on legacy claims management and can often monitor legal developments and settlement trends more closely than active carriers managing a broad range of current operations.
Despite these benefits, AM Best stresses that sellers must consider potential complications, including data quality issues, claims transfer challenges and retained tail risk in partial loss portfolio transfers or adverse development coverage. In this case, ongoing supervision may still be required, reducing the effectiveness of the separation.
From a value perspective, AM Best sees capital efficiency as the key driver behind non-life runoff trading. Traditional portfolios often consume large amounts of regulatory and ratings agency capital while contributing very little to returns. By transferring these liabilities, insurers can improve returns, strengthen their balance sheets, and redirect capital toward growth initiatives. Operational simplification is another key benefit mentioned by AM Best, especially for insurance companies that no longer maintain the systems or expertise required to manage older or niche portfolios.
AM Best also noted the depth of claims management expertise within Specialty Runoff. Many firms have developed teams capable of handling complex litigation and long-term liabilities across multiple jurisdictions, supported by strong oversight by third-party administrators. AM Best notes that even where the ceding company retains direct claims control, experts will often take an active governance role.
At a market level, AM Best describes the non-life runoff specialist as an important stabilizing influence. By absorbing legacy risks, they help insurers have cleaner balance sheets and build greater resilience during periods of regulatory changes, major loss events or changes in market conditions. They offer flexibility in structuring deals and are not constrained by traditional underwriting measures such as combined ratios, allowing for longer-term value assessments.
AM Best says the non-life runoff market remains concentrated, with a handful of global players dominating activity. What started out as a response to insurance company failures and complex asbestos and environmental claims has now expanded to the wider market, with greater diversity in deal structures and liability types.
Citing PwC’s Global Insurance Runoff Survey, AM Best pointed out that the global runoff reserve market is estimated to be approximately US$1.1 trillion by the end of 2024. While overall debt volumes have remained relatively stable, the number of deals has been smaller but larger in recent years, with this pattern changing in 2025 as more small and mid-sized deals are announced.
AM Best added that transferred portfolios have also become more diversified beyond traditional long-tail risks to include longer duration risks such as automotive. Six companies – Enstar, Riverstone International, Premia, Compre, Marco and DARAG – accounted for more than half of global non-life insurance run-off deals in 2023 and 2024, and their share will continue to increase in 2025, according to data cited by AM Best from PwC’s 2025 run-off deal database. AM Best concluded that this growing concentration highlights the central role runoff experts currently play in support. Capital management and long-term strategic objectives of insurance companies.
