Insurers who neglect to actively manage their life and annuity closed-block portfolios are making a mistake. These portfolios can drive up operating costs, reduce financial flexibility, increase risk across a number of fronts, and absorb critical management and customer service bandwidth at a time when it is needed most.
Now, thanks to technology advances, a robust market for acquiring closed-block portfolios, and increasing expertise among third parties for squeezing profit from them, the time is now for insurers, private equity firms, and others in the value chain to reassess their runoff strategies and move forward.
This paper explores the challenges that insurers face maintaining closed-block portfolios, and the overarching mistake they make in their strategy. We outline three solutions and a process for how firms can extract value from closed-blocks.