Gallagher signs up to R&Q ‘broker wrap’ service

Broking group Gallagher has signed up to use run-off specialist Randall & Quilter’s new ‘broker wrap’ service.

The service, which R&Q unveiled in January this year, allows brokers to transfer unwanted or legacy business to R&Q for a fee. R&Q then administers the business, taking responsibility for procedures such as accounting, premium and claims handling and regulatory reporting.

In its full-year 2010 results, announced this morning, R&Q said the new broker wrap product is being well received by the market. In addition to the contract with Gallagher, the firm said there was “further significant market interest in this unique product offering finality to broker legacy accounts for which brokers have ongoing cost and no future revenue.”

R&Q made a profit after tax of £6.4m for 2010, compared with a £171,000 loss in 2009. On a pre-tax basis, the 2010 profit was £7.5m, up from a profit of 259,000 in 2009.

The bulk of the 2010 profit was generated by the company’s insurance services division, whose operating profit increased to £5.8m from £2.5m, and its insurance investments division, whose operating profit increased to £7.4m from £1.3m despite the expected drop in investment income in the second half of the year.

The captives division turned in a “satisfactory” performance with an operating profit of £200,000, down from £700,000 in 2009 because of investment costs of the divisions Nordic venture.

The new underwriting management division, under which R&Q manages Lloyd’s syndicates on a turnkey basis and runs managing general agents (MGAs), made a loss of nearly £1m because of investment in staff and infrastructure. The division helped Norwegian P&I club Skuld launch a syndicate in 2010. It also launched UK and Canadian MGAs.

R&Q was acquisitive in 2010, buying Reinsurance Solutions and ETMC from reinsurance broker Guy Carpenter and a number of new reinsurance debt positions. The company said 2011 will be a year characterised by consolidation, in which it aims to deliver organic growth. However, it added that it would not forgo interesting growth opportunities where the price is right.