R&Q and Obra form new joint venture for major legacy deal

R&Q Insurance Holdings and ILS investment fund Obra Capital (formerly Vida Capital) have formed a new joint venture to land a major legacy liabilities deal relating to coal dust, asbestos, silica, and other exposures of a global safety equipment manufacturer.

R&Q and Obra have acquired a wholly owned subsidiary of global safety equipment manufacturer MSA Safety Incorporated through their new joint venture. The acquired subsidiary holds product liability claims relating to coal dust, asbestos, silica, and other exposures.

MSA Safety contributed approximately $341 million in cash to the Company, in addition to related insurance assets, and the joint venture contributed $35 million.

Under the deal, R&Q will provide claims and management services and Obra will provide investment management services to the Company.

The transaction has enabled MSA Safety to remove all legacy cumulative trauma product liability reserves, related insurance assets, and associated deferred tax assets of the divested subsidiary from its balance sheet.

William Spiegel (pictured), R&Q’s executive chairman said: “We are pleased to form a joint venture with Obra to acquire and professionally manage these legacy liabilities, providing MSA Safety with a complete finality solution. This is an exciting transaction for R&Q, showcasing the capabilities, reputation and innovation of our Legacy Insurance business. This will see our reserves and non-insurance liabilities under management increase to over $1 billion, comprising two pools: traditional insurance reserves via Gibson Re, and non-insurance legacy liabilities, furthering our goal of becoming a manager of legacy liabilities.”

Andrew Pinkes, R&Q’s chief executive officer of legacy insurance said: “While we have been providing Legacy Insurance solutions to insurers, reinsurers and corporate captives for decades, this transaction opens up a new growth avenue in providing similar services for non-insurance, corporate liabilities. This transaction is a strong demonstration of R&Q’s expertise in underwriting and managing long-tailed liabilities, as well as our innovative approach to structuring and delivering comprehensive finality solutions.”

Blair Wallace, CEO of Obra Capital said: “With our team’s decades of experience investing in, managing and servicing long dated liabilities, we are excited to partner with R&Q on this liability solution. The transaction highlights both our ability to deploy capital into this type of risk as well as our capability of focusing on targeted investment returns in a portfolio framework that considers both asset risk and the liability requirements for a broad variety of liability types.”

Peter Polanskyj, head of structured credit at Obra, added: “This transaction highlights Obra’s diverse investment capabilities ranging from deploying opportunistic capital into specialty risk situations to leveraging our more traditional investment capabilities across a variety of fixed income capital markets to enhance investor returns.”