Dickson Manchester merger leads to HCC writing its PI business
Hiscox and QBE will experience a "considerable reduction" in the volume of professional indemnity (PI) business received from Dickson Manchester (DM) following the broker's merger with Rattner Mackenzie (RM).
HCC Insurance Holdings, which owns both DM and RM, confirmed the merger of the two Lloyd's brokers this week.
It is understood that a "significant amount" of DM's PI business will now be underwritten by HCC.
DM director Michael Dickson confirmed that there would be a "considerable reduction" in the amount of business the broker placed with Hiscox and QBE. A source close to the deal said Hiscox and QBE were "hopping mad" after being told the news.
Hiscox chief executive Bronek Masojada said: "We have been expecting it since the change of ownership. We had a few million of capacity running through."
QBE said: "QBE has a large and successful PI underwriting operation, and DM is a valuable part of this. Our priority is to ensure continuity for all our client base and we are currently reviewing all strategic options in this respect."
Under the terms of the deal, DM will become a division of RM specialising in professional indemnity.
Dickson said DM's director of broking Simon Fitzgerald had left the firm following the merger, but that all other DM staff would remain.
Dickson said the merger would not affect DM's plans - announced in November 2003 - to develop a book of employers' liability (EL) and public liability (PL) business.
In a related development, the underwriting agency HCC Diversified Products will focus on smaller UK and EU PI business. DM founder Charles Manchester will become chief executive of HCC Diversified Products, which is expected to write £50m of UK PI business in 2004.
HCC acquired DM at the end of 2002.
Last year, HCC agreed to purchase a 20% share in Illium to provide working capital, as well as £25m of capacity for Illium Syndicate 4040.