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Monday 01 November 2010
Author: Russell Group

Specialist non-life insurance investor, service provider and underwriting manager Randall & Quilter, (R&Q) has agreed to acquire Reinsurance Solutions Limited (RSL UK), from Guy Carpenter and Marsh Limited.

The group has paid $10 million for the business which specialises in the provision of administration and consulting services to the active and run-off (re)insurance industry. RSL UK provides broker replacement services for UK insurers and service providers in run-off. RSL US provides insurance consulting and run-off administration services for US based re(insurers), state liquidation departments and regulators.

Commenting on the acquisition, Ken Randall, R&Q’s Chairman and Chief Executive, said: “We are delighted to have reached agreement with Guy Carpenter to purchase the RSL businesses and ETMC.

“In addition to generating additional sustainable profits for the Group’s insurance services division, the RSL businesses will increase the Group’s client base and depth of expertise and should generate other cross-selling opportunities.

“We also look forward to managing the ECRA pool and providing services to the CMC Pool, the participants of which are major players in the North American reinsurance market.“

R&Q added: “The fit with the group’s existing operations in the UK is excellent. As well as bringing the efficiency benefits of scale, RSL UK will further establish Randall & Quilter as a leading player in the broker replacement market. In the U.S., RSL will provide the Group with a substantial third party service business to balance the Group’s existing operations, currently focused on managing the three owned insurance company portfolios.”

In 2009, the RSL businesses generated fees of over $13m and $1.75m* in pre-tax profit from 85 clients (based on pro-forma unaudited management accounts). There are 75 employees in total; 40 in the US and 35 in the UK.

Following the acquisition, R&Q intends to restructure the RSL businesses, the costs of which will be taken in the current financial year.

In addition, the Group has agreed to acquire Excess & Treaty Management Corporation (ETMC) and certain related employees from Guy Carpenter.

ETMC is a management company for the run-off of the Excess Casualty Reinsurance Association (‘ECRA’) pool. It will be acquired for a consideration of $1 on a debt free basis and at completion is expected to have c. $9.5m in funding, related to the business’ expected future ECRA servicing costs.

Following the acquisition, the Group has also agreed to provide run-off management services using ETMC’s employees to the Carpenter Management Corporation in respect of its U.S. based managed run-off pool (the ‘CMC Pool’)