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R&Q novates four portfolios related to the ILS P&C run-off fund


Randall & Quilter (R&Q) Investment Holdings, the specialist non-life insurance and reinsurance legacy investor and program manager, has novated four portfolio agreements related to ILS P&C Re, the property & casualty run-off focused insurance-linked investment fund linked to Credit Suisse and sub-advisor ILS Investment Management (ILSIM).

randall-quilter-logoR&Q said this morning that it has completed the novation of four loss portfolio transfer agreements that were previously managed by Armour Risk Management Ltd., the parent to the ILS P&C run-off fund advisor ILS Investment Management (ILSIM).

The agreements were previously in place between ILS P&C Re, one of the entities holding the risk the run-off fund assets were invested in and entities of the global QBE Group.

R&Q said that two of the agreements have been novated to R&Q Re Bermuda Ltd and two to R&Q’s wholly owned Lloyds’ Run-off Syndicate 1110.

The two R&Q entities will now provide QBE with protection under the novated reinsurance agreements.

The four portfolios comprise of more than £75 million of reserves, all related to insurance and reinsurance employer’s liability and public liability risks.

The risks largely come from the UK and Ireland and were underwritten by the QBE Group prior to 2008 in its company and syndicate businesses.

These risks will have been ceded to Armour’s ILS P&C Re vehicle to support what was a novel longer-tailed liability focused ILS investment vehicle.

R&Q has now provided economic finality to novate the existing loss portfolio transfers, covering business written across several platforms and jurisdictions. It has also taken over the claims management of the business.

R&Q will now use the rest of its infrastructure to provide full finality to the QBE Group for these portfolios, including a Part VII transfer, the company explained.

Paul Corver, Group Head of M&A at R&Q, commented, “We are thrilled to have been able to provide an exit solution for the investors behind ILS P&C Re. The novation includes multiple portfolios across various classes of business, platforms and jurisdictions showing the ability of R&Q to utilise its extensive group structure to provide a range of finality solutions. We are pleased that R&Q continues to be a market of choice for such transactions and look forward to working with QBE to also provide them with legal finality.”

Credit Suisse and ILS Investment Management, a unit of Armour Group, launched the first legacy P&C focused ILS fund in Autumn 2014 with $576m of committed capital to invest in longer-tailed run-off business.

That fund successfully ran its course, leading to a second iteration of the run-off focused ILS fund being launched for 2018 that raised somewhere around the $700 million to $800 million mark.

We understood that there had been some adverse claims development related issues, with a number of the risks or portfolios ceded to the ILS P&C Re legacy liability focused ILS fund strategy, which we believe may have resulted in its latest iteration being wound down.

As a result, it appears that this transaction sees R&Q stepping-in to assist with the process, by giving finality to the fund and therefore to it’s investors, helping to free up remaining capital and likely speed its return.

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