Non-life run-off market sees continued deal flow in Q2’25, says PwC

PwC, a professional services firm with deep expertise in the insurance and legacy markets, has released its latest review of the non-life insurance run-off sector, covering the second quarter of 2025.

According to PwC, activity in the market remained steady through Q2, with 10 publicly disclosed deals bringing the total for the first half of the year to 22 transactions.

Although there was a modest decline in volume compared to the first quarter, the strategic use of run-off structures remains a consistent feature of insurance market dynamics globally.

PwC highlights a resurgence of transaction activity in Continental Europe following a subdued 2024, suggesting that the market is becoming increasingly familiar with and receptive to run-off as a tool for restructuring.

This renewed momentum outside the UK and North America underscores a growing confidence among regulators and market participants in the viability of legacy transfers. European activity in the quarter included notable transactions by legacy specialists DARAG and Compre.

DARAG took on a Danish workers’ compensation book, while Compre completed the acquisition of a Belgian motor and casualty portfolio. According to PwC, these deals point to a broader trend of firms seeking to achieve legal finality and streamline operations in maturing regulatory environments.

In North America, legacy transactions involving corporate liabilities continue to play a significant role. PwC notes that FARA Pacific Holdings acquired Todd Shipyards LLC from Vigor Industrial, a transaction that included asbestos-related exposures and associated insurance assets.

This deal reflects the continued appeal of isolating complex long-tail risks—particularly environmental and industrial liabilities—through run-off solutions.

The UK also remained active, with Marco Capital completing its second acquisition from the R&Q estate. The purchase of R&Q Gamma, which holds occupational disease and workers’ compensation liabilities, is a further example of targeted legacy transactions that align with broader portfolio and risk management strategies.

As PwC explains, such acquisitions allow buyers to deploy capital in a focused way while helping sellers exit exposures that no longer align with their core objectives.

PwC observes that motivations for run-off transactions are continuing to shift. While freeing up capital was once the dominant reason for engaging in legacy deals, current drivers are more varied. Many transactions now aim to simplify portfolios, exit specific jurisdictions, or achieve legal closure on historical liabilities.

This evolution is particularly evident in the UK and US, where stronger underwriting results through 2024 and early 2025 have reduced the pressure for capital-driven divestments. Even so, regulatory capital costs—particularly in jurisdictions governed by Solvency II—mean balance sheet optimisation remains a live issue, especially across Europe.

According to PwC’s market analysis, the role of run-off in broader corporate and M&A activity is also becoming more pronounced. With insurers and acquirers focused on growth and transformation, legacy platforms are increasingly being used as tools to manage tail risk before or after deals are executed.

PwC notes a clear uptick in cases where reserves are either offloaded ahead of acquisitions or carved out following completion, in order to reduce capital drag and improve strategic clarity.

As a result, deal structures are becoming more complex, and acquirers are favouring platforms that offer cross-border capabilities and operational agility. Service-based businesses are also of increasing interest to legacy buyers, who see value in diversifying their propositions.

PwC is currently advising clients on the sale of both a UK-based motor insurer in run-off and a claims handling business—transactions that are expected to attract strong interest from established legacy consolidators.

The broader macroeconomic picture continues to influence deal activity, according to PwC. Inflation remains unpredictable, interest rate policy is still uncertain, and the introduction of US tariffs in April 2025 is adding cost pressures in segments such as motor and property. PwC expects these factors to influence decisions to exit or restructure certain portfolios in the months ahead.

Persistent inflation is also having a more technical impact on run-off deals, as it affects both reserve assumptions and discounting methods—key elements in deal valuation and structuring.

Despite these complexities, investor appetite remains strong. PwC reports that new market entrants, including a major global asset manager, are actively exploring opportunities in the legacy space, reflecting continued interest in run-off as a long-term, scalable asset class.

Technological transformation is still at an early stage, but PwC notes a gradual increase in the use of AI tools to support diligence, data analysis and triage. These developments are expected to improve deal execution efficiency over time, although widespread adoption remains limited for now.

As 2025 passes its midpoint, PwC believes the non-life run-off market is on solid footing to maintain its momentum through the rest of the year.

Activity levels in the UK and US remain healthy, interest across Continental Europe is growing, and corporate groups continue to evaluate legacy strategies as part of their broader financial and operational planning. Run-off is increasingly seen not just as a tool for freeing up capital or managing claims, but as a meaningful lever in strategic restructuring.

PwC will be presenting more insights into these trends at the Monte Carlo Rendez-Vous in September, where it will release the sixteenth edition of its Global Insurance Run-Off Survey.

Earlier this year, we hosted a discussion focused on the evolving legacy re/insurance space, which featured 11 experts from across the market.