TRADITIONAL INSURANCE RUN-OFF
TraRO is an established instrument for insurers to externalise closed books of business to release tied capital.
Arndt Gossmann and parts of Gossmann & Cie.’s management team introduced run-off in continental Europe when building its market leader between 2009 and 2017. Today it is an established instrument to release capital that does not support the active business anymore.
Global insurers hold liabilities of US$260 million (*PwC estimate) in their balance sheets that relate to entirely closed books of business. Insurance companies must continue to manage these portfolios. Beyond the operational burden and the remaining volatility, the Solvency II directive requires insurers to allocate capital for the liabilities related to these closed books of business, despite the fact that no further premium can be generated from them in future.