After a “fantastic” 2024 underpinned by a progressive global buildout and impressive year-on-year growth across all key metrics, Andy Creed, Group Chief Financial Officer (CFO) and UK CEO of legacy acquirer RiverStone International, is “very positive” on where the run-off market is going.

Last week, at the annual IRLA conference in Brighton, UK, we spoke with Creed about RiverStone International’s robust 2024 performance, the importance of the firm’s investment approach, and broader market trends including repeatability and technology, as well as where the legacy space goes from here.

“2024 was an absolutely fantastic year for us,” said Creed. “We’re obviously extremely pleased with the way the business has been going, not just from a financial point of view, but also from a business development and a strategic growth point of view.”

CVC Capital Partners acquired RiverStone from Fairfax in 2021, and Creed explained that it’s been a really good journey under the CVC ownership team.

“You can see that support, that strategic mindset, that professionalisation they’ve brought to the business just really coming in and just helping us move forward in a really positive way,” he said.

In 2024, the legacy carrier’s underwriting income increased by 22% year-on-year, investment income rose 23%, and profit grew 20%, while the underwriting return on reserves spiked by five percentage points to 5.1%.

At the same time, net insurance liabilities are growing by around 10% annually, and Creed told Reinsurance News that growth has likely occurred faster than anticipated for the firm, driven by RiverStone taking advantage of the momentum in the Lloyd’s market, but still in a deliberately controlled manner.

“Our ability and the speed with which we’ve expanded into the US, set-up in Bermuda and acquired the Irish platforms, have been faster than our original business plan with CVC. Although, we always knew that we had the operational capacity and infrastructure to deliver this,” said Creed.

“Fairfax were a fantastic parent to work with but third-party retrospective transactions was never really a key part of their strategy. So, when Fairfax sold us to CVC, we were sat here going, look, we know we can do great things with this business, we can take it in a fantastic direction and really deliver. The CVC team have just come in and really supported us and allowed us to do that. They’ve asked the right questions, and they’ve challenged in the right way, but really just supported us and backed us, and allowed us to push on to achieve what we wanted to just in a more efficient way than we initially planned,” he continued.

Early last year, RiverStone acquired an Irish insurance carrier and later in the year completed the purchase of a US carrier, progressing its international expansion and providing balance sheet access to the largest run-off market in the world.

“We had built and established a very good platform in the UK and we’d started our journey into Europe with the acquisition of a Malta platform. However, the lean into the Bermuda and the US markets were the ones that we really wanted to focus on,” explained Creed.

“Everyone accepts that the US market is the largest place in the world for run-off business. It’s growing but it is still relatively nascent. It’s set up with 50 states rather than just one country, so you’re having to deal with an environment in which there is still education that needs to go on in terms of developing the legacy market. However, the opportunity there to offer the solutions that the legacy market is able to are really fantastic. Also, Bermuda, of course, is such a well-respected reinsurance hub, and it made natural sense for us to establish a reinsurer there to provide those solutions,” he added.

In terms of future attention for RiverStone, the CFO highlighted opportunities in Australia, but warned that expansion into the wider Asia Pacific region (APAC), at this time, could be more challenging.

“Australia is currently a market of one specialist legacy consolidator. We think Australia is likely to be the next geography that we seek to move into, potentially as a stepping off point for the rest of APAC. APAC is still quite nuanced, and we need to be able to focus in on the things that are important to us and manage it in the right way. You don’t want to expand your operations too much, to spread yourself too thinly. So, we’re very pleased with where we’ve got to in the US, Bermuda and in Europe, and we think Australia might be the next area where RiverStone itself is likely to expand,” said Creed.

Relationships are key in the insurance and reinsurance world, legacy included, and although RiverStone completed loss portfolio transfers with three blue chip clients it had an existing relationship with, repeatability is a challenge in the run-off space.

“It’s a question of building that partnership with them and working with them and having them understand you as a business, you as people, you as a partner, and your counterparty strength,” said Creed. “That reputation and your ability to operate and work in a way that’s collaborative and is able to deliver value for both sides, is so important to these large businesses and what they’re trying to achieve. They want these deals to be a success for them, and they want these deals to be a success for us. I think a lot of the blue-chip carriers would say that they would welcome a credible and well established legacy market with a number of counterparties around. We love being able to work with those types of clients. They do come to us with larger deals and doing larger deals is important to us.”

However, according to Creed, building repeatability in a pure, repeatable way, continues to be quite difficult for the legacy market to achieve.

“There’s so many nuances and individual factors that go into any particular transaction that just having the expectation that you can do a forward trade on some future business is tricky. But we know that people will come back to us if we work with them in the right way.

“RiverStone prides itself on its integrity, its skillset, and the way that it works for people to build those relationships. The building of those relationships and working with people collaboratively, working through problems when they inevitably arise, we’re doing that in a way that’s fair and balanced. Ultimately, in our view, this approach will lead to the position where we would expect people to come back to work with us again and again,” he said.

As mentioned earlier, RiverStone’s investment income rose 20% year-on-year to $259 million in 2024, which is a significant 260% increase on 2022, with investment income now driving 50% of the company’s revenue.

In light of this, we asked Creed about RiverStone’s investment approach and how this metric has evolved over the years.

“When CVC acquired us all of our investments were managed in-house by Fairfax, and the strategy wasn’t necessarily designed specifically for a legacy acquirer as we had a very short duration pot of assets,” he explained.

In 2021, when interest rates were very low, the firm’s very short duration portfolio worked in RiverStone’s favour and gained from the fact that interest rates were on the rise. With the view that rates were continuing to increase, it gave RiverStone an opportunity to deploy those short duration assets into a more balanced strategy, matching asset duration to liability duration and taking advantage of higher rates.

“When CVC acquired us, we didn’t have a Chief Investment Officer. We now have Neil Taylor in that role and he’s built out a team of 10, so we’ve got our own in-house investment function, and we have a strategic asset allocation that works both for the group but also for each of our individual operating entities across the group, which will consider the duration of their own liabilities, also their regulatory environment in which they operate, and the currencies in which they operate.

“Fundamentally, our approach has always been that we want strength in our balance sheet, and that comes from predominantly having a fixed income asset portfolio that is very, very well matched to the duration of our liabilities,” said Creed.

Before concluding with a sector outlook, we questioned Creed on the importance and role of advanced technology in the legacy space.

“I think it’s critical,” he noted. “Having a strong operational and technological infrastructure has made a massive difference for RiverStone over our 25-year history. We run an in-house, bespoke claim system, which was built originally in the mid-90s and we have continued to migrate every single acquisition portfolio that we’ve acquired over the last 20 years onto that system, so that all of our data, all of our claim’s information is held in one central database and repository. That makes a difference in being able to drive value. You can see your portfolio overall, you can see where you’re diversified, you can see where you’re concentrated, and your claims adjusters are all working on the same systems. Your data is much cleaner; your MI is much cleaner.”

Adding: “So, yes, I think it’s crucial, the ability to operate quickly, the ability to see those areas that you need to work and will just make a difference. Where we sit and where we play from a liability management perspective, is really, on the edges in many ways. The more that you can act on those edges and see those edges faster and respond to them in a quicker way with technology is going to make a big difference to what you can achieve.”

The second half of 2024 and notably the final quarter of the year was more active for the legacy space, and 2025 has seen numerous deals with momentum being sustained, so far.

Looking ahead to the rest of the year, Creed told Reinsurance News that he’s “very positive” on where the sector is and where it’s going.

“I think it’s great that we’ve got some strong players in this space who are operating across all sizes of business. There’s some, RiverStone included, playing in the large deal side with plenty of people playing in the medium and lower end of the scale as well. So, I think that it’s great to have those core players here supporting the business.

“I think there’s opportunity as well, deal flow continues to be strong. So, I think we’ll continue to see opportunities coming out, particularly from the US as well. We’ve seen more European deals get traded this year as well, which is good.

“So, yes, I’m feeling very good about where the sector can go. We’ll continue to work hard on being diligent about the deals that we select and finding the ones that meet our risk appetite, and overall, it’s a very positive space.

“The large number of brokers who are now operating in this space is just another helpful tool to getting access to the insurers and the reinsurers to help them understand how we can benefit their business, and this will help us keep moving forward,” concluded Creed.

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