S&P has revealed that it is launching a new ratings scale for the run-off industry.

Speaking at the ARC Congress today, Peter Hughes, vice president of the corporate and governance practice at S&P, said the Run-off Recovery Ratings (RORR) “will indicate the expectation or likelihood of the ultimate recovery of principal from the reinsurer in run-off”.

This likelihood is then mapped against the new recovery rating scale which ranges from “1+” representing the highest expectation of full recovery and 100% of principal, down to “5” representing a negligible recovery, or 0%-25%, of principal.

The announcement came alongside the publishing of a new survey by PricewaterhouseCoopers and the Association of Run-off Companies (ARC) into the European run-off market which estimated its size at around €204bn. However, Peter Abbott, deputy chairman of ARC, pointed out that run-off was still fairly unrecognised across much of Europe.

“France is quite far down the line in terms of recognising its run-off market and obviously the UK has been a run-off centre of excellence for some time,” he said. “However much of Europe is still lagging far behind in terms of recognition of its run-off liabilities.”

Earlier, ARC chairman Philip Grant had described the run-off industry as “capital recyclers” and “eco-warriors of the insurance environment”.