No shortage of legacy demand but US casualty concerns linger: PwC

Demand for legacy solutions remains strong despite the drop in completed deals in the first half of 2024, while concern over deterioration in US casualty reserves continues, according to panellists at PwC’s Monte Carlo legacy event.

PwC said just $1.4bn of gross liabilities were transacted in H1 2024, less than a third of the amount recorded in the same period in 2023. But speakers said that this did not reflect a lack of demand in the market as deal enquiries have remained high.

McGill and Partners’ Andy Hill said that deal drivers have shifted relative to the previous 18 months, with the majority of significant transactions related to the recycling of capital for deployment into the hard market.

“What we've really seen is a demand for earnings volatility relief solutions, and particularly driven by some of the volatility we've seen on US casualty lines. Deals that have come to market have required either the cedant or the reinsurer to compromise either on structure or price,” said Hill.

US casualty has been the most high-profile area of concern at this year’s Rendez-Vous, and PwC’s Andrew Ward said the much-talked-about casualty reserve deterioration will likely fall into the legacy market.

“We have heard a lot about the awful results in US casualty, and I'm sure there is a bit of pain to come for legacy carriers who are doing deals on the softer market years,” said Ward.

However, he was optimistic that the broadly better books expected in the coming years will offer a real opportunity for a more proactive legacy market, particularly on claims handling.