Friday 14 February 2014 – One year on from having successfully launched a new Lloyd’s syndicate, Randall & Quilter recently announced a doubling of capacity for 2014. Ken Randall*, the group’s co-founder, Chairman and Chief Executive, says the venture draws on Lloyd’s long history for entrepreneurialism and innovation. (source: Lloyd’s of London)
What is the strategy for your Lloyd’s business?
Our business plan is consistent with key elements of Lloyd’s long term strategy – to improve the control and oversight of delegated authorities, raising the standard of risk controls and technology, and developing capacity from Lloyd’s Names and emerging markets.
How were you able to double syndicate capacity for 2014?
Diversity is a big part of what we do, and this is demonstrated by our blend of capital providers. For 2014 we have achieved a good balance with 20% from our own capital, 40% from Names and the remainder from established corporate capital providers, and now Q-Re, a wholly-owned subsidiary of Qatar Insurance Company.
What is the significance of securing the backing of capital from emerging market players like Q-Re?
Lloyd’s wants to attract both business and capital from emerging markets, and our partnership with Q-Re is an excellent example of this. In our experience, expanding the Lloyd’s market is about developing relationships for the future and new entrants welcome such opportunities to participate at Lloyd’s.
Was it also important to gain the support of Lloyd’s Names, the private investors that also back the syndicate?
Names are an increasingly diverse and sophisticated group of investors and have demonstrated that they are an incredibly resilient source of capital. For us, Names stepped up to the plate when asked, and we had a fantastic response from private investors when we decided we wanted to double our capacity.
Do you believe that R&Q brings something new to Lloyd’s?
We have purposely set out to build a Lloyd’s centric business – we are not a multi-national insurer with a Lloyd’s underwriting platform. We believe that it is important for new entrants to add something to the market, and I think we have demonstrated this through the diversity of our capacity and the business we are accessing.
What is R&Q’s approach to developing its Lloyd’s business?
We look to develop relationships with managing general agents (MGAs) around the world to access business while at the same time maintaining high levels of oversight. Our focus is on identifying niches that require more attention when underwriting – the potential for profit can often be found in the detail of underwriting.
Are MGAs an attractive way of building your Lloyd’s business?
With a focus on controlling losses, we see the MGA model as an efficient way for the market to access the smaller premium higher volume business that may otherwise not be well suited to a subscription market like Lloyd’s. Business sourced through MGAs could be used as a way for the market to expand, but it is important that underwriters maintain oversight and focus on how MGAs are controlled. We believe that we are raising the bar in terms of delegated underwriting. In recent years insurers have been improving controls for MGAs, but where we differ is that we use our own technology to monitor the business as it is written, not weeks or months later.
As an early innovator in outsourcing insurance services, do you believe that shared services can play an important role in Lloyd’s success?
The golden rule is to not outsource core competencies, but shared services can be more cost effective than leaving it to each syndicate. For example, R&Q was named the preferred service provider for credit control services by the Lloyd’s Market Association in November. For us, a situation whereby each syndicate has to chase premiums does not make sense when they could engage with a provider that has the systems and expertise to do so, and at a considerable cost saving.
*A qualified accountant, Ken Randall has worked in the insurance industry for almost 40 years, including a stint as Head of Regulation at Lloyd’s in the 1980s, and as the Chief Executive of Lloyd’s managing agent Merrett Group.
In 1991 Randall co-founded R&Q, which initially focussed on run-off business and providing insurance services, but now also manages captive insurers and Lloyd’s syndicates on behalf of third parties, as well as owning its own MGA business. In January 2013, R&Q launched its own Lloyds’s syndicate.