R&Q buys from Guy Carpenter

Randall & Quilter (R&Q) has agreed to buy run-off consultants Reinsurance Solutions (RSL) from Guy Carpenter and Marsh for $10m in cash.

The RSL businesses will be acquired on a debt free basis with estimated working capital of $2.75m.

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.

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.

R&Q said it would restructure the RSL businesses in the current financial year, causing a small loss from the RSL businesses during 2010.

$1 deal

R&Q has also agreed to acquire Excess & Treaty Management Corporation (ETMC) and certain related employees from Guy Carpenter for $1. ETMC is a management company for the run-off of the Excess Casualty Reinsurance Association ('ECRA') pool.

R&Q’s statement to the Stock Exchange this morning said: “ETMC 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.”

R&Q has agreed to provide run-off management services using ETMC's employees to the Carpenter Management Corporation in respect of its US-based managed run-off pool (the 'CMC Pool')

Cross-selling opportunities

Ken Randall, chairman and chief executive, said: "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.