R&Q Investment Group is to sell its Lloyd’s MGA to a Boston-based medical professional liability provider for a cash payment of $22.6m (approximately £17.7 million), it was revealed yesterday.
The Group, also known as Randall and Quilter, has reached an agreement to sell its entire share capital of R&Q Managing Agency (RQMA) to Coverys, in a move which is expected to receive change of control approval by Lloyd’s and the PRA in late 2017.
R&Q chairman and CEO, Ken Randall, called the proposed sale “a significant milestone” in the Group’s decision to simplify its operations and focus on legacy acquisitions, management, and the provision of services to its live underwriting partners.
“R&Q Managing Agency Ltd is a well-developed and scalable platform and we are confident it will prosper under the stewardship of Coverys,” he said in a statement. “We have enjoyed working with Coverys for several months to assist in the further development of their business in the London market. There is a good cultural ‘fit’ between the two organisations and we look forward to continuing the relationship in respect of Syndicate 3330 and exploring opportunities to work together in the future.”
On completion, the agreement involves the cash payment by Coverys to R&Q of $22.6 million, which, after costs and related incentive payments, will result in estimated net proceeds to R&Q of £13.9 million. This is expected to generate a gain of approximately £12.6 million over the carrying cost of RQMA in the Group’s 2016 audited accounts.
Through the acquisition, Coverys will inherit the continued responsibility to support the syndicates currently under management RQMA, CEO and President of Coverys, Gregg L Hanson, commented.
“The acquisition additionally allows Coverys to assist new underwriting syndicates that seek to launch their business at Lloyd’s, while also maintaining business operations for existing syndicates,” he said. “We are excited to enter the London marketplace and will look to RQMA’s industry knowledge and expertise to guide us in this prestigious market.”
The sale follows the previously announced decision by R&Q to simplify its operations, focusing on core, high-growth activities including the acquisition/assumption of run-off portfolios and the use of its licensed companies in the US and EU as conduits for niche and profitable books of P&C business, primarily to highly rated reinsurers. The net proceeds of the sale will be deployed to help finance the “ever growing legacy transaction pipeline,” especially in the US and Lloyd’s, and to generate valuable commission income from the use of Accredited and Malta’s direct licenses, R&Q said in a release.
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