R&Q raises $100m to capitalise on opportunities created by COVID-19

Insurance services and legacy acquisitions specialist Randall & Quilter (R&Q) is raising $100 million through a new equity investment by 777 Partners and ILS-focused investment fund Hudson Structured Capital Management.

R&Q expects the ongoing COVID-19 pandemic to "create considerable future opportunity" for the group's specialty legacy and programme management businesses. It said the new investment will help the company further capitalise on these "significant opportunities".

The company will raise $80 million from Brickell Insurance Holdings, an investment vehicle controlled by 777 Partners. Another $20 million will come from funds managed by investment manager Hudson Structured Capital Management.

The subscription will constitute an investment in new ordinary shares of R&Q at a price of £1.35 each. The proceeds will be utilised primarily to invest in the growth of R&Q’s programme management and legacy businesses.

The company's executive directors Ken Randall, Alan Quilter and William Spiegel, said in a joint statement: “We are extremely pleased to have raised these funds. We have long been clear on the significant opportunities we see for the Group in the two fast growing markets we operate in: program management and legacy.

"It has become apparent that the market dislocation currently being experienced will only increase demand for these specialist capabilities as the balance sheets of traditional insurance companies come under increased strain. The equity we have secured will enable us to proactively and quickly move to capitalise on these dynamics as the market seeks the solutions R&Q is able to provide."

Commenting on the effect of COVID-19 on R&Q, the executive directors said: "The outbreak of the pandemic will have a limited impact on the Group’s existing business. Whilst there will be some near-term delay in completing transactions, we believe the impact of the pandemic on the wider insurance industry will create considerable future opportunity for the Group. Our existing legacy books have limited exposure to unexpired risk, our program management portfolios are largely reinsured with highly rated counterparties, and our investment portfolio has an average duration of 2 years with approximately 92% of our investments rated BBB or better of which approximately 51% is in government bonds and cash. Our conservative investment portfolio has resulted in net unrealised losses of only 1.4%% as of 22 April 2020.”

Josh Wander, founder and managing partner at 777 Partners, commented: “We are excited to continue to support R&Q’s growth as a world class underwriter and servicer of specialty risk. Since our initial investment, Ken, Alan and now William have consistently validated 777’s strategy of investing in best in class management teams who deploy a thoughtful approach to prudent risks with asymmetric upside. We are confident that fresh, flexible capital will enrich shareholder value by facilitating R&Q’s ability to execute on the boundless opportunity resulting from prevailing market conditions.”

Michael Millette, founder and managing partner at Hudson Structured, added: “Hudson Structured is delighted to join Randall & Quilter as an equity investor. We see exciting growth opportunities in the legacy and program management businesses and believe that R&Q’s management team are well positioned to address them.”