All material subject to strictly enforced copyright laws. © 2021 Insurance Insider is part of Euromoney Institutional Investor PLC.
Accessibility | Terms & Conditions | Privacy Policy | Modern Slavery Act | Cookies | Subscription Terms & Conditions

Syndicate1245 latest Lloyd's RITC

Lloyd’s insurer Chaucer Holdings plc has struck a deal to close Heritage Managing Agency Ltd’s Syndicate 1245 into its own Syndicate 1084.

The reinsurance to close (RITC) transaction through its managing agency Chaucer Syndicates Ltd sees Heritage pay a reinsurance premium of £42.5mn to close the open 2002, 2003 and 2004 years on Syndicate 1245.

Syndicate 1245 wrote a property and North American casualty focussed book, with adverse development on all three years and 2002 hit by controversial US bail bond losses in its surety underwriting.

Chaucer said it been successful against a number of rival quotes from RITC providers, adding that two syndicate staff will join the insurer to help administer the run-off.

It also revealed that if the run-off is favourable, reinsured members of Syndicate 1245 may benefit from a premium refund.

Chaucer’s CFO Mark Graham commented: “Working successfully with Heritage and members' agents, we have developed an innovative closure solution for capital providers seeking an efficient exit from Lloyd's syndicates faced with a potentially volatile run-off.”

Heritage, meanwhile, welcomed the deal, “which gives finality to the Syndicate's capital providers while providing an opportunity for them to share in any future improvement in the Syndicate's reserves through an innovative return premium mechanism”.

Nick Johnson of Numis Securities, said the deal should “modestly enhance” earnings per share at Chaucer, with estimated investment income of around £2mn on an annualised pre-tax basis.

“The transaction is a further extension of Chaucer’s strategy to develop incremental income through management and run-off of third party syndicates, which utilises surplus capital and spreads the group’s operating costs across a wider premium base,” he said.

The Heritage deal is the latest in a series of RITC deals as new capacity in the sector increases the opportunity for affordable finality solutions.

As reported in Insider Week last Monday, start-up Lloyd’s Syndicate 2008 completed its first RITC deal with the closure of the notorious 2001 account on XL Insurance syndicates 861 and 588.

The Syndicate is managed by Shelbourne, launched by ex-Liberty Syndicates duo Sean Dalton and Andrew Elliot with backing from FPK Capital and Enstar Group and an initial focus on closing Lloyd’s open years, is thought to be capable of closing transactions totalling at least £100mn.

It is also understood to be close to an RITC transaction for the 1999, 2000, 2001 and 2002 years on Jago Syndicate 205.

And last week Capita subsidiary CMGL Syndicate Management confirmed that it had closed four RITC transactions, as predicted in the February issue of The Insurance Insider.

CMGL Syndicate 5500 will write the RITC of Duncanson & Holt syndicates 1308 and 1999, as well as former Cotesworth syndicates 228 and 536, now managed by Capita.

The deals will close the 1998 and 1999 years on syndicates 1308 and 1999, the 1999 and 2000 years on Syndicate 228, and the 1999 year on Syndicate 536.

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree