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Run-off

Managing an insurance portfolio closed to new business until all its claims are settled.

Definition

Run-off is the run-down management of an insurance or reinsurance portfolio that no longer writes new business but must keep settling the claims of contracts already concluded, until they are fully run off. A portfolio enters run-off after the abandonment of a line, the liquidation of a carrier, or a strategic decision to stop an activity deemed unprofitable. Entering run-off does not mean closing the next day: liabilities can run for years, even decades on long-tail lines. A specialized market has grown around the transfer of these portfolios. Dedicated run-off acquirers buy these liabilities to manage them more efficiently, betting that the transferred reserves will cover residual claims and leave a margin. This legacy market lets a cedant free up tied-up capital and refocus, while passing the reserving uncertainty to a specialist. The risk in run-off is reserving: underestimating future claims can turn an apparently profitable operation into a loss, especially on late-reported claims and lines prone to adverse development.

Its 9 cross-references, woven across the glossary's 18 categories
Run-off: Reinsurance glossary illustration, AlgoPolis
Example

An insurer decides in 2025 to exit medical liability, a line that has run at a loss for three years. The portfolio enters run-off: no new policies, but claims from the 2018 to 2025 underwriting years continue to be reported and to develop for ten to fifteen years. Rather than managing this long-tail liability alone, the insurer negotiates a loss-portfolio transfer to a legacy specialist, which acquires the reserves for 85 million euros against an internal estimate of 80 million, betting its run-off expertise will let it settle claims below the transferred reserves.

Read next
ReinsuranceCession and retrocessionCession is the transfer of risk from insurer to reinsurer; retrocession is its transfer from reinsurer to another reinsurer.Read the entry →ReinsuranceSunset clauseA clause extinguishing the reinsurer's obligation for any loss reported after a set period following treaty expiry.Read the entry →ReinsuranceClean cutA method of closing a proportional treaty at expiry by transferring the premium and loss portfolios to the next treaty.Read the entry →
Put it to work
QuizWhat decides whether a treaty pays, and how you get out of oneAcademy questions on this concept, each one marked and explained.Test yourself →
Related terms
On the Wire, where this term came up
September 8, 2026Compre's renewable Lloyd's reserve cover leaves the year of account open
Go further at the Academy
Course · RA-2By what other routes does a risk leave the insurer's balance sheet?LessonThe past rather than the future: ceding losses that have already occurredLessonLeaving a treaty: commute, novate, or wait for extinction
Also known as

run off, legacy business, discontinued business

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