RQIH.L Regulatory News (RQIH)

Randall & Quilter Investment Holdings Ltd.

Insurance Business Transfer of ECRA Pool Liabilities

26 November 2020

Randall & Quilter Investment Holdings Ltd. ('R&Q' or 'the Group') is pleased to announce that the Oklahoma Insurance Commissioner ('the Commissioner') has approved the Insurance Business Transfer ('IBT') of a portfolio of Sentry Insurance a Mutual Company ('Sentry') reinsurance policies to National Legacy Insurance Company ('NLIC'), an R&Q wholly owned subsidiary. The policies relate to Sentry's involvement as a member of the Excess & Casualty Reinsurance Association pool ('ECRA').

The IBT application reviewed by the Commissioner included extensive financial information, a plan for how the transaction will be communicated to stakeholders and a report from an independent expert, concluding that the proposed transaction will not have a materially adverse effect on stakeholders. The transfer of Sentry's ECRA pool insurance liabilities to NLIC will not change policy terms, rights and obligations or the way the policy is administered. 

The Commissioner's approval will now allow the parties to petition the Oklahoma District Court ('the Court') to obtain final approval.

Modelled on the successful Part VII transfer process in the UK and EU, Oklahoma's IBT legislation provides a mechanism for insurers to legally transfer (re)insurance business to another insurance company following consultation with stakeholders and a Court hearing.

Mike Walker, Head of Legacy at R&Q said: "We are pleased to have completed this important step in the Oklahoma IBT process and we will now focus our efforts on engaging with stakeholders and obtaining a successful Court outcome. We believe this innovative solution will become increasingly common as a tool to transfer liabilities effectively between insurance companies. It will prove to be of particular use to those entities looking to exit lines of business or dispose of legacy portfolios in the US. The oversight of the Commissioner and the Court, coupled with the rigour of the Independent review and communication processes required under the legislation, provides a robust framework for stakeholder protection."

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Unique Transaction

The US is the industry's largest P&C legacy market with liabilities estimated at $792bn. Until recently, however, there has not been a mechanism similar to the Part VII transfers used in the UK/EU which enables insurance liabilities to be transferred enabling owners of discontinued business to achieve finality while also enabling claims and portfolios to be efficiently managed under new owners.

Last month, the first transfer took place under the Oklahoma's Insurance Business Transfer Act. However, this was an internal portfolio transfer between two entities with a common parent. Today's development is the first time a transfer has taken place between two entirely separate counterparties. It has the potential to be a major milestone in the development of the US P&C legacy market.

About R&Q 

R&Q is a non-life global specialty insurance company operating two core, highly complementary, businesses: Program Management and Legacy Insurance. Both these businesses are leaders in markets with high barriers to entry and significant secular growth opportunities.

Legacy Insurance generates profits and capital extractions from expert management of legacy non-life insurance portfolios. Program Management generates commission income from its licensed (and rated) carriers in the US, EU and the UK, writing niche and profitable program business, largely on behalf of highly rated reinsurers.

Legal Entity Identifier (LEI): 2138006K1U38QCGLFC94

Website : www.rqih.com