Delivering Value

Successful Solvent Run Off of YMCA Bermuda Domiciled Captive Reinsurer

RunOff Re.Solve LLC led the run off of Y-Mutual Insurance Company Ltd from 2008 through to the conclusion of the run off via a members’ solvent liquidation in 2011.

Y-Mutual was incorporated in Bermuda in 1986 as a captive reinsurer “owned” by member YMCA’s throughout the United States. At its height, over 450 separate YMCA organizations were members of Y-Mutual.

From 1986 through the time it entered run off in early 2007, Y-Mutual provided reinsurance protection to five “fronting companies” that had insured the individual YMCA members of Y-Mutual. The individual members YMCA’s and, by extension, the front carriers and Y-Mutual, were subject to numerous auto and property liability, general liability and workers compensation claims. Y-Mutual discontinued active underwriting and went into run off in February 2007, at which time there were over one thousand pending claims subject to its reinsurance protection.

The Brief

Y-Mutual was a non-assessable mutual. It could not ask its members for further capital contributions and had to manage the run off with limited financial resources. RunOff Re.Solve designed and implemented a run off plan (in coordination with the Bermuda Monetary Authority) that allowed Y-Mutual to maintain solvency, effectively manage the claims administered by a third party service provider and honor its reinsurance obligations to the front carriers.

At the outset of the run off, it was anticipated that, if an orderly wind down of the company was possible on a solvent basis, it would take at least nine years to eliminate all of Y-Mutual’s reinsurance obligations.

Results

With RunOff Re.Solve’s guidance, Y-Mutual honored all claims to the front companies in just four and a half years after it terminated active underwriting and entered run off, less than half the anticipated time. After conclusion of all of its reinsurance obligations to each of the fronting companies, Y-Mutual was deregistered as a licensed Bermudian reinsurer and closed through a solvent members’ liquidation process.