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Randall Group launches recoverables initiative

The relentless quest by (re)insurers to manage down their reinsurance exposures has inspired a new approach to crystallising the industry’s recoverables.

Traditionally, (re)insurers concerned about trying to realise a reinsurance asset will often sell the debt to companies who specialise in recovering them from the carrier.

This has the benefit of realising cash for an otherwise illiquid asset but is often completed at a significant discount to original face value. As the cedant would have booked the asset on its balance sheet, this will often necessitate a heavy write-down on the company’s balance-sheet.

Indeed, as the debt may already have been discounted, the overall effect can make a significant impact on the company’s financials.

But Randall & Quilter Investment Holdings Ltd – the owners of the Norwich based run-off group Cavell – has launched a new company which will look to partner with cedants in recovering their reinsurance assets.

Reinsurance Finance Management Ltd (RFML) will provide alternative financing arrangements to companies. These will be structured to providing immediate liquidity and will prevent the need for further discounting.

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