R&Q Insurance announces potential sale and split completion

New equity into the group also revealed

R&Q Insurance announces potential sale and split completion

Insurance News

By Terry Gangcuangco

R&Q Insurance Holdings has issued a big update – revealing, among other things, the potential sale of its program management business Accredited.

In a London Stock Exchange filing, the non-life specialty insurance company announced the following:

  • a capital raise of $50 million, with the opportunity to increase the amount to $60 million;
  • the completion of the separation of Accredited and R&Q Legacy;
  • and the possible offloading of Accredited.

According to R&Q, the new equity involves Scopia Capital Management and features non-voting, perpetual preferred stock. Meanwhile the split between the group’s program management and legacy insurance units has been approved and will see the two operate under separate holding companies within a reorganized R&Q.

As for the divestment prospect, the firm had this to say: “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.”

Accredited, which no longer pays intra-group dividends to R&Q as part of a requirement to obtain financial strength rating from AM Best, posted a 34% increase in gross written premium (GWP) in the first quarter.

In R&Q’s announcement, chief executive William Spiegel said: “This additional capital, alongside our completed internal reorganization, means Accredited and R&Q Legacy can be established as standalone 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 March 31, 2023, Accredited’s GWP is ~$2 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 reorganizational 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.”

Spiegel added that the goal is to allow both businesses to maximise their potential by having the right ownership and capital structures in place.        

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