R&Q creates third-party capital options, as R&Q Re registered as SAC

Randall & Quilter (R&Q) Investment Holdings, the specialist non-life insurance and reinsurance legacy investor and program manager, has registered its wholly owned Bermuda reinsurance subsidiary R&Q Re (Bermuda) Ltd. under as a segregated accounts company (SAC), opening up potential new avenues to third-party capital.

R&Q has always made it clear that bringing third-party capital within its business structure in an efficient manner, utilising insurance-linked securities (ILS) vehicles, would be an attractive way to fund growth and bring investor capital into larger deals alongside its own funds.

R&Q wants to access alternative capital on the legacy side of its business, having already employed an element of collateralised reinsurance within its own program and actively been exploring sidecars or ILS fund type structures to bring capital in to help it do more.

On the legacy side the ambition has been very clear, with executives previously saying that, “Our key goal for the Legacy business is to add a recurring fee component to its income by managing legacy business on behalf of third parties.”

As we explained recently, it also makes sense for R&Q to look to third-party capital and ILS investors as capacity support for its burgeoning program management business as well.

Today, R&Q has announced a change in the registration status of its Bermuda domiciled reinsurance vehicle R&Q Re Ltd.

R&Q Re has been registered under the Segregated Accounts Companies Act 2000, as of September 30th 2020.

R&Q Re, which is a Class 3A Bermuda reinsurance company, is R&Q’s primary legacy vehicle in Bermuda.

It had statuary capital of $100 million at 30 September 2020 and has been increasingly active in recent years, reinsuring inter-group legacy transactions and acting as an acquirer of Bermuda and Caribbean-based captive insurers.

R&Q Re’s insurance license was already amended in 2020 to allow it to enter into third-party reinsurance arrangements.

Now, adding the segregated account features, which allow it to segregate transactions within the reinsurance vehicle and ringfence their assets and liabilities, provides R&Q with even more options on the traditional side and to expand R&Q Re’s range of legacy solutions for the insurance and reinsurance market.

Ken Randall, Executive Chairman of R&Q, commented on the change in registration, “Since 2015, R&Q Re has been at the forefront of our legacy market offering and the Company’s statutory capital has tripled in that time. We continue to see a significant number of opportunities to provide full and economic finality solutions to the captive and commercial insurance markets and these changes will allow us to further capitalise on them.”

Stewart Ritchie, CEO of R&Q Re, added, “R&Q Re’s registration as an SAC will allow us to provide counterparties with legacy solutions where the assets and liabilities are legally ringfenced, whilst benefitting from the capital strength of R&Q Re’s growing balance sheet.”

While R&Q Re having segregated account company capabilities is good for R&Q’s legacy business, it also opens up completely new options for working with third-party capital.

SAC reinsurance structures are utilised in Bermuda for transactions where a third-party investor collateralizes the obligations within a transaction and the segregated account structure means individual, or groups of investors, can support specific contracts or transactions, all within the same vehicle.

Which provides R&Q with a structure that could easily support bringing third-party capital into its business, to participate in specific legacy or program management related reinsurance arrangements.