Randall & Quilter (R&Q) executive chairman William Spiegel has set out a vision for continued growth across the group’s program management and legacy arms following a strong result for both the full year 2020 and first quarter of 2021. 

R&Q

Spiegel, who succeeded co-founder Ken Randall as executive chairman of R&Q at the start of April, told The Insurer both of the group’s core specialist areas were currently seeing significant growth opportunities. 

He said the program management business was benefiting from the growing number of independent MGAs across the world. 

R&Q program management gross written premium ($mn)

“This is the mechanism of choice for the entrepreneurial underwriter. Independent MGAs are growing premiums around twice as fast as the overall P&C market, but they can’t grow business without program partners.”

Over the past five years, Spiegel said the number of MGAs has increased by 44 percent with independent MGAs growing premiums at 10 percent per annum, compared with a growth rate of 5 percent in the broader P&C market.

R&Q program management contracted premium at period end ($mn)

“Reinsurance capital, while large and growing, is being disintermediated by insurers holding on to more of the risk,” he said.

Spiegel said the MGA space represented a “significant addressable market”, with less than 10 percent of the $100bn annual premiums generated by MGAs currently intermediated by independent program managers.

“In program management we have said we will grow GWP [gross written premium] to at least $1.5bn by 2023,” he said.

R&Q Legacy pre-tax operating profit (£mn)

In 2020, GWP rose 46 percent to $539mn.

“On contracted premiums – which is what MGAs say they will get us – we are at $1.4bn so I think we are ahead of plan.”

The program management unit serves as a recurring fee business for R&Q, with the group connecting MGAs to reinsurers and earning a 5 percent fee in return.

“We continue to see the long-term trend recognising legacy as a core part of the insurance ecosystem,” he said.

R&Q legacy operating return on tangible equity (%)

Within its legacy segment, Spiegel said the group was also eyeing opportunities to originate and manage legacy business on a recurring fee basis.

“We see opportunities for sidecars in the legacy space,” he said. As previously reported by this publication, banking sources suggest plans are well advanced for the initiative with a year-end target earmarked for launch.

In the near term, Spiegel said the legacy outlook was strong for the second half of the year, the period in which most legacy deals are typically done. 

R&Q said it currently has five legacy transactions representing ~£150mn of net reserves under “exclusivity”.