William Spiegel, Executive Group Chairman of Randall & Quilter (R&Q) Investment Holdings, said this morning that insurance-linked securities (ILS) markets are a target for the firms growing program management business.
R&Q typically works alongside managing general agents (MGA’s) and reinsurance providers to them, helping them deploy program focused capacity using its licensed Accredited and other brand insurance platforms in the US, Bermuda and Europe.
So those reinsurance providers could be insurance-linked securities (ILS) fund managers in some cases, which is an area that R&Q is targeting further growth for the program management and fronting side of its business model.
This morning, R&Q announced that its program management business grew its gross premiums written by 91% in the first nine months of 2021, writing $714 million this year, compared to $395 million by the end of Q3 2020.
More importantly than volume, R&Q’s fee income from the program side of its business rose faster, with 138% growth in the nine month period.
R&Q’s program services offering booked $39 million of fees in the nine months of 2021, more than double the $16 million booked in the prior year.
70 programs were written for in 2021 to the end of September, up from 39 in the prior year as well.
Growth has continues for this business segment as well, with R&Q reporting that since September it has added five new programs, taking the total number of programs to 75, and lifting Contracted Premium to over $2 billion.
Executive Chairman Spiegel said, “We are pleased to report another strong quarter of growth in our Program Management business.”
Sitting between risk capital and primary sources of risk has a significant value proposition when the capital comes from sources that don’t have the platforms, access, or scale to write the business themselves.
For ILS markets, working with a program services provider can not just smooth access to risks from further towards the start of the market chain, it can also open up opportunities that they may only have seen once a risk cascaded through the market to the reinsurance or retrocession end.
It’s no surprise Spiegel would like to target this segment, as there’s a clear opportunity to help ILS fund managers in accessing selected portfolios of risk in a more efficient manner, fronting that risk and wrapping it into a portfolio reinsurance deal that a fund can more readily assume.
Spiegel commented, “Our pipeline of opportunities remains robust, and we remain focused on developing strategic partnerships with leading MGAs, highly-rated reinsurers and the ILS markets in both Europe and the US.”
Specific opportunities could open up for R&Q around Florida, given it has a licensed carrier domiciled there, with the impending depopulation of Citizens one opportunity that may appeal to some ILS funds, but for which they’d need a fronting and program management partner.
There are plenty of other opportunities in the market to take ILS market capacity to programs of insurance business, if that kind of risk appeals to an ILS fund manager.
R&Q is also tapping third-party capital sources on the legacy side of its business as well, having raised its first sidecar this year.