Randall & Quilter Agrees to Acquisition by R&Q Shareholder Brickell for £482M
Randall & Quilter Investment Holdings Ltd. (R&Q), the Bermuda-based program management and legacy acquisition specialist, announced it has agreed to be purchased by shareholder Brickell PC Insurance Holdings LLC for £482 million ($632 million) in cash, as well as $100 million of new equity funding.
Under the terms of the acquisition, each R&Q shareholder will be entitled to receive 175 pence in cash for each R&Q share, which values R&Q’s existing issued share capital at approximately £482 million. The share price represents a premium of approximately 20% to the closing price per R&Q Share of 146 pence on March 31, 2022.
In addition, Brickell, which currently has a 23.2% stake in R&Q, has committed to provide new equity funding to R&Q of $100 million to de-lever R&Q’s balance sheet and improve the group’s financial profile following new management’s in-depth review of the group’s legacy insurance portfolio.
Focusing on program management and legacy insurance businesses, R&Q has operations in the U.S., UK, Europe and Bermuda, with 308 employees across eight offices. Brickell is controlled by Steven W. Pasko who has more than 35 years of financial services experience. Brickell’s principal economic investor is 777 Partners LLC, a Miami-based global investment firm.
In response to new accounting standards due to become effective in 2023, R&Q said its Legacy Insurance business took a significant step in 2021 towards transformation into a capital lighter, more recurring fee-based business model through the formation of Gibson Re, a Bermuda-domiciled collateralized reinsurer with about $300 million of third-party capital.
Gibson Re provides a legacy sidecar reinsurer for 80% of R&Q’s Legacy Insurance business and is designed to simplify the Legacy Insurance revenue model, R&Q explained.
However, this repositioning of Legacy Insurance inevitably will result in a temporary reduction to R&Q’s earnings as Legacy Insurance transitions from upfront “Day One” underwriting income to annual recurring fee income. Under new accounting standards due to become effective in 2023, “Day One” underwriting income will not be permitted.
R&Q’s directors, which hold about 3.31% of the company, believe the terms of the acquisition and new equity funding are in the best interests of shareholders and, accordingly, they intend to recommend unanimously that R&Q shareholders vote in favor of the deal at the general meeting, which is expected during the week of May 23, 2022. Both shareholder and regulatory approval are required.
To facilitate the deal, Brickell PC2 Insurance Holdings Ltd. will be incorporated in Bermuda for purposes of merging with R&Q. R&Q will become an indirect wholly owned subsidiary of Brickell. After completion of the merger, R&Q would be owned by Brickell which will then be the holding company of both R&Q and Brickell’s other existing insurance operations.
Source: Randall & Quilter Investment Holdings Ltd. and Brickell PC Insurance Holdings LLC