Dear Friend,
The story of the legacy sector is about two households divided.
In keeping with the traditional cyclical character of the wider insurance industry, some of the run-off sector's biggest players are taking their first tentative steps into the live market. There's a certain poetic justice in the transition, which has seen legacy carriers, funded by the mistakes and liabilities of the past, take their experience back to the underwriting floor.
And like the two households in Shakespeare's "Romeo and Juliet", the Capulets and Montagues - "both alike in dignity" - the indifference between the live and legacy houses goes back so far that live underwriters seem to forget that it was the legacy sector that came to the rescue of the London market in 1996.
The creation of Equitas under the Lloyd's Reconstruction and Renewal process brought the market back from the brink of almost certain collapse under the weight of its old liabilities.
Like the hapless Romeo and Juliet, Randall & Quilter (R&Q) and Enstar have sought to reunite the two warring factions, entering the live market with their own respective platforms.
But this new marriage between the two houses has got off to a rocky start.
Enstar's acquisition of Atrium, which was confirmed in June last year, has seen no end of difficulties. The Lloyd's underwriter lost its aviation team and Ace dropped the newly-acquired carrier from its reinsurance security list shortly after Enstar completed the deal.
R&Q, meanwhile, launched its Syndicate 1991 at the beginning of last year, although it has got off to a sluggish start. Nevertheless, the legacy services firm has remained committed to its newly formed carrier, doubling stamp capacity to £150mn at the beginning of 2014.
With the honeymoon period well and truly over, both players have had their trials and tribulations in getting their respective live platforms off the ground.
But unlike the tale of Romeo and Juliet, there's no magic potion to put to sleep the legacy-to-live players until the whole saga works itself out, for better or worse.
This year's Legacy Barometer found that industry executives were divided, almost exactly down the middle, on the issue of whether the movement into the live market was a sign of strength or weakness in the sector.
But there is some sign of light on the horizon. Over 70 percent of respondents said they expected Solvency II to spark opportunities in the legacy market in the medium term. And with more than 90 percent of executives saying they are at least as optimistic about the year ahead as they were about 2013, there seems to be a glimmer of hope emerging.
But let's hope the sector gets the message before it takes the apothecary's potion and kills off its live operations; because we'd all rather see the market joined in matrimonial celebration than grieve over the failure of an exciting revelation in the legacy market.
Enjoy the read!
Dan Ascher
Editor, Legacy
To view the 2014 legacy barometer please click here