R&Q agrees with ProSight Specialty Insurance to manage Syndicate 1110
Randall and Quilter Investment Holdings (R&Q) said on Oct. 30 that it has reached an agreement with ProSight Specialty Insurance (ProSight) to novate the management of Syndicate 1110 (S1110) to R&Q Managing Agency Limited (RQMA).
The deal includes the outsourcing of the day to day claims handling of non-US business to R&Q Central Services. At the same time, R&Q will acquire, for a nominal sum, the 100 percent shareholding of the ProSight corporate members ProSight Specialty (TSMC) and ProSight Specialty (ECUCM) that provide capital support to S1110.
ProSight will continue to meet Funds at Lloyd’s (FAL) obligations in respect of S1110 until a Reinsurance to Close (“RITC”) by R&Q in early 2020. ProSight has the option of requiring R&Q to provide up to 30 percent of the FAL with 4 months’ notice in exchange for annual payments to cover R&Q’s cost of capital. Based upon current expectations, the amount of FAL R&Q could be required to provide is circa £9.4 million, the majority of which would be sourced from external funding providers.
As part of ProSight’s exit from Lloyd’s, all of S1110’s reinsurance of ProSight’s US based insurance companies was commuted, and business sourced by ProSight coverholder ProSight Specialty Insurance Solution to S1110 is being reinsured back to the ProSight Group via 100 percent quota share reinsurance provided by ProSight’s subsidiary New York Marine and General Insurance Company (NYMG). S1110 will also have the benefit of an Aggregate Stop Loss reinsurance on the non-US business by NYMG in excess of current syndicate reserves of circa £76 million.
R&Q, as owner of the corporate members, will have the benefit of 75 percent of any future reserve savings, with ProSight retaining a 25 percent profit interest.
Subject to regulatory approvals, R&Q will also acquire ProSight Specialty Underwriters Limited (PSUL) and ProSight Specialty Managing Agency Limited (PSMAL). PSMAL will be de-authorised ahead of the completion of the acquisition by R&Q. The consideration payable will be equal to the tangible net asset value of the two companies, approximately £1.1 million in cash.
“Our appetite for using our expert claims administration skills in the run-off of legacy Lloyd’s portfolios continues and this transaction is evidence of that,” R&Q chairman Ken Randall, said. “The ongoing collaboration with RQMA and Coverys, its proposed new owners, provides R&Q with continued access to the infrastructure required to manage syndicates with legacy business and we look forward to completing further transactions as the pipeline in this segment continues to grow.”
Randall & Quilter pursues a buy and build strategy and has created a comprehensive range of investment activities and services in the global non-life insurance market.
ProSight CEO Joe Beneducci commented: “We are pleased to have completed this transaction enabling us to recapture our well performing US book of business and also retain a profits interest on the UK portfolio. We look forward to working together with R&Q on the run-off of the UK book.”
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