Run-off Specialist Randall & Quilter to Buy Three Guy Carpenter Subsidiaries

Run-off specialist Randall & Quilter Investment Holdings plc has agreed to acquire three subsidiaries from Guy Carpenter & Co., both companies said.

Randall & Quilter said it had agreed to acquire Reinsurance Solutions Ltd. and Reinsurance Solutions LLC, their employees and various other assets and liabilities for $10 million in cash.

The RSL businesses will be acquired on a debt-free basis with estimated working capital of $2.75 million, R&Q said.

Also, R&Q said it had agreed to acquire Excess & Treaty Management Corp. and certain related employees from Guy Carpenter. ETMC is a management company for the run-off of the Excess Casualty Reinsurance Association pool.

R&Q said it would acquire ETMC for $1 on a debt-free basis and at completion is expected to have $9.5 million in funding, related to the business' expected future ECRA servicing costs.

Founded in 1995, RSL provides administration and consulting services to insurers, reinsurers and regulators, with 70 professionals located in offices in the United States and in the United Kingdom.

Many prominent property/casualty insurers participated in the ECRA pool until it was dissolved in 1982 and placed in run-off. The pool made headlines last month when the New York Supreme Court ruled that reinsurers including Munich Re America Corp. Group should pay $262.3 million, plus interest, to pay their share of nearly $1 billion in an asbestos settlement that a subsidiary of Travelers Insurance paid in 2002.

The court has ordered American Re, now part of Munich Re America Corp. Group, to pay $202.5 million and interest, which could actually be another $369.4 million. In addition, the court ordered a group of reinsurers who did business as ECRA -- Ace Property & Casualty Co., Century Indemnity Co., OneBeacon American Insurance Co. and Excess Treaty Management Corp. -- to pay $59.8 million in damages, plus as much as $109 million in interest (BestWire, Aug. 27, 2010).

Randall & Quilter is a specialist nonlife insurance investor, service provider and underwriting manager. The company said it is active in both the "live" and "run-off" markets, and owns and manages a portfolio of nine insurance companies in run-off in the U.K., U.S. and Europe with net assets of 74 million pounds ($114.1 million) as of June 30. It also is a captive manager in Bermuda, according to the company's website.

The ETMC transaction is expected to close in September 2010, while the RSL transaction is expected to close in October 2010 following receipt of regulatory approvals and satisfaction of other closing conditions, the companies said.

Attempts to reach both Guy Carpenter and R&Q for additional comment were not immediately successful.

In 2006, Ace Ltd. sold three run-off reinsurance entities to R&Q: Ace American Reinsurance Co., Brandywine Reinsurance Co. (UK) Ltd. and Brandywine Reinsurance Co. S.A.-N.V. At that time, Ace said the sale removed about $900 million of exposure to legacy liabilities, including asbestos. The sale also trimmed Ace's reinsurance recoverables by about $400 million (BestWire, July 6, 2006.)

R&Q also handles Transport Insurance Co., which is in run-off, according to a 2009 Best's Special Report on U.S. Asbestos & Environmental Liabilities.

(By Meg Green, senior associate editor, BestWeek: [email protected])