R&Q Announces Capital Raise of $50M-$60M, Completes Reorganization
R&Q Insurance Holdings, (R&Q) the non-life speciality insurer that focuses on program management and legacy insurance business, announced a capital raise of $50 million to $60 million.
In addition, it has completed a planned reorganization to separate Accredited (its program management business) from R&Q Legacy (its legacy acquisition insurance business).
Describing the details of the capital raise, R&Q said $50 million of non-voting, perpetual preferred equity was issued by Randall & Quilter PS Holdings Inc., an indirect wholly owned subsidiary of R&Q, from investment funds affiliated with one of its largest shareholders, Scopia Capital Management. There will be an opportunity to increase the amount of equity raised to $60 million.
Further to R&Q’s announcement on April 4, 2023 on its plan to separate Accredited and R&Q Legacy, R&Q has received all necessary approvals to complete this internal reorganization. Accredited and R&Q Legacy will now operate under two separate holding companies within the group. This separation is part of the requirement for Accredited to receive its own separate subgroup financial strength rating from AM Best.
R&Q continues 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. In addition, a variety of strategic alternatives are being explored in relation to R&Q Legacy.
“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,” commented William Spiegel, chief executive officer.
For the 12 months ended March 31, 2023, Accredited’s GWP is approximately $2.0 billion, an increase of ~$200 million from year-end 2022 when Accredited reported GWP of $1.8 billion, he added.
“We are currently working very closely with AM Best to secure a subgroup rating for Accredited and have completed the key reorganisational requirements,” Spiegel said.
“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,” Spiegel continued.
“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.”
R&Q said Accredited reported strong results during the first quarter of 2023 with GWP rising 34% to $500 million, compared with $400 million in Q1 2022. It also reported program fee income of $22 million (Q1 2022: $18 million), a 24% increase.
Source: R&Q Insurance Holdings