The European run-off market is likely to increase over the next five years as a result of legislative changes, says a PricewaterhouseCoopers (PWC) report.

More than four-fifths of respondents to PWC's survey believe the EU Reinsurance Directive is likely to result in an increase in transfer activity, while more than 60% indicate Solvency II will lead to an increased focus on run-off and the exploration of exit options.

The European run-off market contracted slightly last year from €204 billion ($327 billion) to €202 billion ($324 billion).

The Reinsurance Directive's harmonisation regime was enacted at the end of last year, while the risk-based Solvency II legislation is due to come into force in 2010.