R&Q taking $60m capital injection to boost capitalisation amid business split

Global specialty insurance company  R&Q Insurance Holdings has secured a $50 million capital injection from one of its largest shareholders Scopia Capital Management, with an opportunity to increase the amount of equity raised to $60 million. The company has also completed an internal reorganisation to its separate programme management and legacy insurance businesses.

R&Q has raised $50 million of non-voting, perpetual preferred equity issued by a new subsidiary Randall & Quilter PS Holdings from investment funds affiliated with Scopia. The newly issued preferred stock will, in certain circumstances, be exchangeable at Scopia’s election into new ordinary shares of R&Q at 60.98p, which represents a 10% premium to the 20-day volume weighted average price prior.

The company noted that the proceeds of the equity will be used to “increase the capitalisation of R&Q Legacy, which is providing reinsurance support for completed legacy transactions originated by Accredited”. Proceeds will also be used for general corporate purposes due to Accredited no longer paying intra-group dividends to R&Q as part of a requirement to secure its financial strength rating from AM Best.

R&Q also said that Accredited and R&Q Legacy will now operate under two separate holding companies within the group, as it has received all necessary approvals to complete its internal reorganisation.

Furthermore, R&Q will continue to explore strategic transactions with third parties as part of the separation to enable Accredited to operate independently. “A process is underway for the potential sale of Accredited with interest expressed from a number of parties,” the company said. “In addition, a variety of strategic alternatives are being explored in relation to R&Q Legacy.”

William Spiegel (pictured), chief executive officer, commented: “This additional capital, alongside our completed internal reorganisation, means Accredited and R&Q Legacy can be established as stand-alone entities within R&Q. 2023 has seen Accredited continue its strong momentum and leadership position in the program market, achieving a record first quarter in terms of GWP and Fee Income. For the 12 months ended 31 March 2023, Accredited’s GWP is ~$2.0 billion, an increase of ~$200 million from year end 2022 where we reported GWP of $1.8 billion. We are currently working very closely with AM Best to secure a subgroup rating for Accredited and have completed the key reorganisational requirements.

“R&Q Legacy has seen three transactions signed or completed this year and has a strong pipeline of transactions to grow Reserves Under Management beyond $1.0 billion. R&Q Legacy continues to focus its efforts on its key areas of strength, medium sized legacy transactions, while exploring potential further corporate liability opportunities.

“I am pleased with the progress we are making to enable both Accredited and R&Q Legacy to maximise their potential by having the right ownership and capital structures in place.”

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