Corporate strategy

DARAG – A reliable partner for Finality and Run-off

DARAG Deutsche Versicherungs- und Rückversicherungs-AG is the first German insurance company specialised in taking over inactive or discontinued business, so-called “Run-off”, of direct insurers and reinsurers to its own balance sheet.

Run-off occurs when insurers cease or partially cease underwriting in particular classes of business or entire sectors. When business ceases, so does income from premiums; however underwriting provisions and claims settlements still have to be recognised, as does the capital requirement under Solvency II. This is a challenge that has to be met by insurers Europe-wide.

In this situation, we assume the part of the transaction that is no longer in the active focus of the transferring insurer’s business. This may be portfolios in run-off, or entire companies. The consequence for the insurer: through selective or extensive transfer of the run-off, future capital requirements are reduced, processing facilitated and complexity minimised. As a result, problem areas in the balance sheet are systematically eliminated and existing potential for reducing costs can be leveraged.

We provide our balance sheet and our know-how

By fully taking over their run-off business, we not only provide insurers with our balance sheet, but also our know-how: we unconditionally assume the claims risk and guarantee the insurer professional and competent claims handling. We provide full balance sheet recognition of the Run-off portfolios through to final settlement – a holistic approach we subsume under the term “Finality”.

The assumption of Run-off can either be effected by portfolio transfers or the acquisition of independent entities in Run-off. A risk margin is calculated on the basis of an actuarial valuation, the anticipated length of the run-off phase and the inherent risk, which is then applied to the transfer and any compensation payment made (purchase price).

According to independent market experts, total Run-off volume in Europe is currently estimated at over € 200 billion

Some € 115 billion of this amount falls to German-speaking countries. As an institutional partner to the insurance sector in Europe and as an experienced direct insurer and reinsurer ourselves, we offer a suitable alternative solution for the management of Run-off. Our goal is to offer insurers reliable and rapid relief from associated risks and at the same time guarantee insurance holders professional and non-bureaucratic settlement of claims. So where external solutions for reducing Run-off are an option, we are a reliable partner at all times.