Spiegel: new R&Q E&S arm will drive growth in $60bn market
Randall & Quilter (R&Q)’s newly minted US E&S platform Accredited Specialty Insurance Company (ASI) completes the London-listed group’s offering in the ~$60bn US MGA markets, according to deputy executive chairman William Spiegel.
The private equity specialist – who joined R&Q at the beginning of the year as founder Ken Randall’s heir apparent – was speaking shortly after AM Best assigned the group’s new US E&S insurance arm an A- (excellent) financial strength rating.
“ASI is now both rated and licensed and set to take advantage of the many opportunities that the vibrant E&S market offers,” explained Spiegel.
“We already have a strong pipeline and are well positioned to begin writing business and building scale,” he added.
A strong rating is a critical component of the group’s fronting offering to MGAs, where R&Q’s insurance companies sit in between the underwriting agencies and their reinsurers, providing the rated paper, licences, claims and regulatory support.
Spiegel’s comments came in an RNS filing this morning by R&Q, confirming AM Best’s rating award. The rating agency also affirmed the group’s financial strength ratings and its IX financial size category.
The Pine Brook co-founder said the group’s new E&S platform will complement its existing program manager business for the US admitted markets.
“The US MGA market is approaching $60bn in annual premiums and most MGAs operate within the E&S market. We are excited by the significant opportunity we have to build a meaningful player in the E&S market to complement our leading admitted market program business, ASC,” explained Spiegel.
He said the move demonstrates both “confidence in our ambitions to build a leading E&S program manager and the business’ capital strength”.
“We are also pleased to have the ratings for ASC and AIEL affirmed [the group’s admitted and European platforms], underpinning R&Q’s established position as a leading provider of high-quality program capacity in both the US and Europe.
“As a program manager with a rating of A- and a financial size of IX, the Accredited companies are one of the best capitalised program managers making us a prime choice for MGAs and reinsurers.”
ASI is headquartered in Arizona, a well-established hub for E&S business. In September, the group unveiled program specialist Pat Rastiello as ASI’s new CEO. The executive joined the group from Aon.
While in October, the group said it had passed a major milestone by agreeing terms to write more than $1bn of gross premiums with its MGA partners.
In addition to its program management arm, R&Q is a specialist in acquiring legacy P&C business. Last week, this publication revealed it had entered into exclusive talks to acquire the non-trading Lloyd’s insurer Vibe.
Numis analyst Nick Johnson noted that receipt of the credit rating for ASIC means R&Q is now ready to begin signing MGAs in the US E&S program management market, and pointed to commentary from management that the company already has a strong pipeline.
“The US E&S market represents an important further growth opportunity beyond the company’s existing program management activities in the US admitted lines market and Europe,” Johnson explained in a note on Monday.
Johnson added that the launch of R&Q’s E&S program management offering should ensure continued momentum for the build-out of the program management business, noting that revenue growth in the unit could be “transformative” for the group.
“We think the company is comfortably on track to achieve its target of $1.5bn-$2.0bn contracted income by 2022/23, possibly with potential to outperform,” he said.
“We expect growth in program management revenue to be transformative for R&Q’s earnings dynamics, in terms of quantum, quality and visibility.”
Numis has maintained a buy rating on R&Q and said firm is currently its “top pick” in the UK small-cap insurance sector.
The Insurer comment
The AM Best rating is a critical component of the R&Q program offering. The business contracted $1.1bn of gross written premium at H1 2020. In addition to Europe and the US admitted markets, it now has the fast-growing E&S segment covered…