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  #1  
Old 12-16-2017, 04:56 PM
fastcount fastcount is offline
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Default Run-Off Business

Hello,

I work in the business development side of my company and we're currently interested in acquiring a company that specializes in acquiring run-off businesses.

The problem is I don't have any idea where to start.

Does anyone have any experience working in this industry? Would you be able to share any industry papers on how it works? Why it's profitable? Etc.

Much help appreciated.

Cheers,
FastCount
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Old 12-16-2017, 05:16 PM
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Maybe you should just read up on Mergers and Acquisitions. That would give you a place to start.

By the way, is this Life, P/C or something else?
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Old 12-16-2017, 05:42 PM
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It's P&C and P&C reinsurers.
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Old 12-16-2017, 05:56 PM
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Is your question valuation of the target company itself, understanding their business model (e.g., how they value the run-off books they acquire), or everything P&C?
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Old 12-16-2017, 06:07 PM
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I do quite a bit of M&A work (on the life side) and the P&C side is most likely the same.

The name of the game is economies of scale and expense management on the administrative cost side, and improved investment returns on the asset side. You need to be able to keep your cost per policy low enough so that you can extract as much value from the run off over time via your investments. Thats how it usually works.
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Old 12-16-2017, 08:14 PM
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I do quite a bit of M&A work (on the life side) and the P&C side is most likely the same.
You have no idea how much money has been lost due to this attitude.
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Old 12-16-2017, 08:26 PM
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You have no idea how much money has been lost due to this attitude.
How so?

Just curious as like I said, my expertise on this is not on the P&C side.
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Old 12-16-2017, 09:31 PM
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How so?

Just curious as like I said, my expertise on this is not on the P&C side.
How often do new claims come up from thirty years ago in a life book?
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Old 12-17-2017, 05:41 AM
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How often do new claims come up from thirty years ago in a life book?
I see. We don't really have to deal with latent claims (like asbestos) like P&C folks do. Almost made Lloyd's go under in the 90s if I recall.
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Old 12-17-2017, 08:02 AM
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While there are differences between P&C and Life, the principle is the same isn't it?

It costs less to add $100m of business onto a $700m block than it does to run the $100m on it's own.
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