Case Studies - RITC Syndicate Management
In 2006, U.S. RE sponsored the formation of RITC Syndicate Management Limited to take advantage of a dislocation in the Lloyds of London market:
- Since the mid-1990s, the Lloyd's market had been suffering from significant reduction in both the numbers of syndicates and Names
- A diverse set of Lloyd's stakeholders had shown substantial interest in having closure for open years of account to release trapped "funds at Lloyds"
- U.S. RE assembled and recruited a highly regarded management team led by Nigel Rogers, who led Octavian Syndicate for 20 years and was CEO of Terra Nova prior to its sale to Markel in 2000
- Syndicate 5678 was formed to be dedicated to providing reinsurance to Lloyds Names to close up to 102 open years
- RITC's first account closure was executed in May 2007, under which it assumed the 2001 and prior open account year obligations of Travelers Syndicate 227
U.S RE Securities, LLC developed an effective investor market strategy outlining the following investor highlights:
- Large and untapped market – 80 open "orphan" run-off years held net loss reserves totaling approximately $4.4 billion ($7.9 billion)
- Run-off of accounts related to underwriting years of 1993 - 2004 only; open years had no exposure to legacy risks (prior to 1993)
- Unique to the Lloyds market, Names had demonstrated a willingness to pay a risk transfer premium in excess of established reserves to be released from syndicates no longer trading
- Rapid investment portfolio growth and high ROE profile resulting from immediate receipt of reserves
U.S. RE leveraged its institutional relationships regarding the opportunity and arranged key meetings with a number of "marquee" investors:
- U.S. RE was instrumental in securing financing commitments to capitalize RITC Syndicate with funds controlled by Pine Brook Road Partners and Soros Fund Management
- Private placement was structured as an "equity line of credit"