New run-off firm Afinia proves run-off is full of opportunity

A number of years ago a run-off manager was in Monte Carlo for the first time. As he walked across Casino Square it “was like the parting of the Red Sea,” describes Nick Eddery-Joel. “Nobody wanted to be seen talking to a run-off manager.”

How the times have changed. Eddery-Joel is chief operating officer of new run-off firm Afinia, backed by the capital market muscle that is Deutsche Bank, along with EOS Credit Opportunities.

Afinia has been set up to help insurance and reinsurance companies release capital and streamline mature or discontinues liabilities.

It started when CEO Amanda Atkins, formerly chief financial officer of Alea, began speaking to Deutsche Bank about various opportunities. “They saw a crossover in what she could do and what they wanted to do,” explains Eddery-Joel.

There was also an advantage in going into business with experienced investors with existing insurance investments, he adds.

“We were taking to investor partners who were a lot further up the learning curve,” he says. “Part of the strength of the relationship is that they already understand the space.”

Afinia intends to do business on a global basis. With its holding company in Bermuda and strong European presence it will not automatically import business into London, currently the most advanced centre for run-off. “It may not necessarily be the best place,” explains Eddery-Joel.

“With Solvency II run-off is not something that can be tucked away into the back office

Nick Eddery-Joel

He believes other markets are evolving quickly in terms of their ability to deal with run-off, Europe in particular.

The company is intended to be a vehicle that will help insurance and reinsurance companies that have decided to exit a particular line of business.

This is part of the evolution of run-off, Eddery-Joel explains. It is no longer about “moving dead bodies”, or putting entire companies into run-off, but having larger entities exit from specific portfolios.

With Solvency II impending in Europe and heftier capital requirements anticipated, more insurers and reinsurers may look to exit the discontinued business on their books. “With Solvency II it’s not something that can be tucked away into the back office,” adds Eddery-Joel.

Run-off has clearly come of age. With the Oracle of Omaha, Warren Buffett, buying up Equitas for £3.7bn last year and now Deutsche Bank backing Afinia, savvy investors clearly see potential.

This year in Monte Carlo those gathered in Casino Square are unlikely to step away from a run-off opportunity.