Company profile: run-off specialist RiverStone

Some companies like to shout about their achievements; others prefer to take a more modest approach. RiverStone, a run-off specialist that is part of the Fairfax Group, falls into the latter of those categories, but a combination of a rebrand two years ago and completion of a number of high-profile, large deals in the past six months has forced an increased profile on the business.

“We have not changed our strategy, but we completed a rebrand two years ago and we have done a better job of telling our story since then,” says Luke Tanzer, managing director of RiverStone UK.

“We have always been a fairly quiet player in the market—we have never really blown our own trumpet. That said, we decided a couple of years ago that we should explain what differentiates us from our competitors, and that has meant a change in how we approach things,” says Tanzer.

Tanzer says that the rebrand focused the company’s mindset on the importance of its values around honesty, transparency and longevity. He says these values have always underpinned the ethos of RiverStone but making these clearer to its clients and stakeholders has helped the company move to another level—and possibly helped it win the bidding on a number of big deals in the past six months.

“Reputation and transparency are very important in the run-off sector, especially for our clients looking to sell books of business to us,” he says.

“The run-off sector has had something of a stigma in the past, which has been unfair, in my opinion. That is why it is so important that our customers understand our commitment to servicing policyholders and the fact that we are in this for the long term.”

In-house expertise

Tanzer stresses that RiverStone has invested extensively over the years in building up expertise in claims and the customer service that wraps around these services. He explains that the business always tries to look at the situation through the eyes of the sellers and maintain their reputation.

It employs underwriters who are tasked with helping understand the ongoing relationships of the sellers of books of business to ensure good relations are maintained at all levels.

“At the heart of everything we do is maintaining the reputation of the sellers,” he says.

Linked to this is the company’s ownership structure. Tanzer explains that being part of a company in the Fairfax Group means that it is not under pressure to produce high short-term returns; equally, there is no risk of the capital it uses being pulled away.

“There is nothing worse than selling a book of business only to see that company resell it to yet another third party in a few years’ time in a deal you have no control over,” he says.

“On top of that, we have the reputation of the Fairfax Group as a whole at the back of our minds,” says Tanzer.

“We offer sellers complex claims management expertise, managed by skilled and tenured professionals who provide ownership, accountability and commitment in their aim to ensure transaction security and maintain sellers’ reputations.

“For insurers and reinsurers ceding legacy business, it is not just what we do at RiverStone that matters, it is also how we do it. We are dedicated to responsible run-off solutions,” he adds.

A global footprint

RiverStone employs around 230 people in the UK and another 325 in the US, and now manages $4.6 billion (US: $2.2 billion; UK: $2.4 billion) of gross liabilities.

In the UK, this is split equally between business stemming from the companies market and Lloyd’s, where it has run a Lloyd’s managing agency and run-off syndicate (3500) since 2003.

Tanzer says that RiverStone was quite active in Lloyd’s between 2010 and 2013, after which the opportunities started to dry up. Last year’s profitability review and strategic overhaul at Lloyd’s has been a catalyst for opportunities to emerge again.

“We are in a good position to take advantage of those opportunities,” he says.

New capital has also moved in, seeking these run-off opportunities. RiverStone’s long track record in the market will hold it in good stead,” he says.

“Given the importance of reputation, do sellers want to deal with a start-up business with no track record in run-off, or with an established company that is very focused on their reputation, such as RiverStone?” he says.

The types of liabilities in RiverStone’s portfolio are very diverse, especially since its acquisition of a number of Lloyd’s portfolios over the last eight months, which comprised a broad portfolio of risks.

On the companies side of the UK market, RiverStone’s portfolio includes the AXA Insurance UK employers’ liability and public liability (EL/PL) business, a deal it completed in 2018 covering approximately $600 million of reserves relating to UK disease-related claims.

This deal was done in the form of a straight Part VII transfer—the first of its kind in the UK to transfer a large portfolio of UK EL/PL business. The other large book of UK business formerly belonged to Brit, which sold its UK company operation to RiverStone in 2012.

In the US, RiverStone manages around $2.2 billion of liabilities mainly relating to specialist claims, such as workers’ compensation, asbestos and construction defect claims.

A pure focus

All this makes RiverStone one of the bigger run-off specialists globally, but with one of the lowest profiles. Tanzer explains that it is one of the few big players in the market solely focused on run-off, with no live insurance operations running in the background.

“We have one focus and we stick to it,” he says. “We want to be known as a specialist run-off company and liability manager that is best in class for sellers looking at disposals, but also keen to protect their reputation.

“We treat these deals in the same way as live acquisitions, with a focus on maintaining reputations and good relationships. We have a 20-year track record of doing this, which we are proud of.”

He adds that the company is flexible in the way it structures deals, and willing to match the needs of sellers. On this basis, it has completed a number of big deals in the UK market in the past 12 months, growing its book from around $800 million to close to $2.5 billion.

Tanzer expects further growth, especially stemming from the current performance reviews at Lloyd’s, where many players are looking to reshape their portfolios and retract from certain lines of business. But, he adds, it has no targets for growth—it is simply able to grasp opportunities as and when they present themselves.

“There is no pressure on us to do deals—we just look at opportunities on their merits when they come along,” he says. “We do see deals in the pipeline but there are certainly no specific targets for us.”

Luke Tanzer is the managing director of RiverStone UK. He can be contacted at: luke.tanzer@rsml.co.uk