TIDMRQIH
RNS Number : 3246C
R&Q Insurance Holdings Ltd
12 June 2023
R&Q Insurance Holdings Ltd
R&Q raises up to $60 million of new equity into the Group;
completes internal reorganisation to separate Program Management
and Legacy Insurance; provides an update on strategic alternatives
being explored; and provides an update on Q1 Program Management
trading
12 June 2023
R&Q Insurance Holdings Ltd, (AIM-RQIH) ("R&Q" or the
"Group"), the leading non-life global specialty insurance company
focusing on Program Management ("Accredited") and Legacy Insurance
("R&Q Legacy") businesses, announces a capital raise of $50
million of non-voting, perpetual preferred equity issued by Randall
& Quilter PS Holdings Inc., an indirect wholly-owned subsidiary
of R&Q (the "R&Q PS Investment"), from investment funds
affiliated with one of its largest shareholders, Scopia Capital
Management ("Scopia"), with the opportunity to increase the amount
of equity raised to $60 million. The preferred stock will, in
certain circumstances, be exchangeable at Scopia's election into
new ordinary shares of R&Q at 60.98p (representing a 10%
premium to the 20-day volume weighted average price prior to the
date of the Agreement).
Further to R&Q's announcement on 4 April 2023 on its
strategic initiative to separate Accredited and R&Q Legacy,
R&Q has received all necessary approvals to complete this
internal reorganisation. 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.
Furthermore, as also announced on 4 April 2023, 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.
The proceeds from the R&Q PS Investment will be used to
increase the capitalization of R&Q Legacy, which is providing
reinsurance support for completed legacy transactions originated by
Accredited. Proceeds will also be used for general corporate
purposes due to Accredited no longer paying intra-group dividends
to R&Q as part of a requirement to secure its financial
strength rating from AM Best.
Q1 Program Management Update
R&Q announces strong results for Accredited in Q1 2023:
-- Q1 2023 Gross Written Premium ('GWP') of $0.5 billion (Q1
2022: $0.4 billion), a 34% increase
-- Q1 2023 Program Fee Income of $22 million (Q1 2022: $18 million), a 24% increase
-- Accredited continues to partner with leading Managing General
Agents in Europe, the UK and the US, and has added five new
programs in 2023. Accredited maintains a strong pipeline and
expects to add additional partnerships over the remainder of the
year
William Spiegel , Chief Executive Officer, commented: "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. For the 12 months ended 31 March 2023,
Accredited's GWP is $2.0 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 reorganisational
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. 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."
Details of the R&Q PS Investment
Under the terms of the agreement relating to the R&Q PS
Investment (the "Agreement"), Scopia has conditionally subscribed
for a new series of preferred stock (the "Preferred Stock") issued
by Randall & Quilter PS Holdings Inc. ("R&Q PS") for an
aggregate subscription price of US$50 million. On issue, the
Preferred Stock will be perpetual and non-voting. The Preferred
Stock will remain outstanding unless and until it is either so
exchanged or redeemed, in each case subject to satisfaction of
certain conditions as described below.
Once issued, the Preferred Stock will, in certain circumstances,
be exchangeable at Scopia's election into new ordinary shares of
R&Q at a 10% premium to the 20-day volume weighted average
price prior to the date of the Agreement, or 60.98p (an
"Exchange"). Any such Exchange will be conditional upon, among
other things, Scopia obtaining any necessary regulatory approvals
and receipt of any required R&Q shareholder approval.
The Preferred Stock is redeemable by R&Q PS in certain
limited circumstances, including, at Scopia's election, where
Accredited is sold outside of the Group, where there is no
transaction for the separation of Accredited from the Group within
twelve months from the date of issue of the Preferred Stock, where
R&Q does not obtain the required R&Q shareholder approval
for an Exchange within 15 months from the date of issue of the
Preferred Stock or where an Exchange has not taken place within 24
months of the date of issue of the Preferred Stock. No redemption
can take place while the Group has any outstanding indebtedness
senior to the Preferred Stock unless the consent of R&Q's then
lenders is obtained for such redemption. Any redemption shall take
place at a price which is equal to the value of the initial
investment increased by a 12 per cent annual return on the
Preferred Stock (subject to an increase to 20% in certain
circumstances, including the failure to obtain the approval of the
R&Q shareholders in connection with an Exchange) or, if
greater, the implied value of the ordinary shares which Scopia
would have received upon the Exchange of the Preferred Stock
determined at the time of such redemption event.
Following the issue of the Preferred Stock and prior to any
exchange or redemption of the Preferred Stock, R&Q has agreed
to allow Scopia to nominate one person as a director to the R&Q
board for so long as Scopia owns at least 15 per cent of the
ordinary shares of R&Q (on an as exchanged and fully diluted
basis) or, should Scopia so elect, to appoint such number of
directors as is proportionate to Scopia's aggregate pro rata
ownership of ordinary shares on an as exchanged and fully diluted
basis. Any such persons' ongoing appointment to the R&Q board
shall be subject to R&Q's bye-laws, and therefore will be
subject to re-election at R&Q annual general meeting.
Scopia's acquisition of the Preferred Stock is conditional upon
R&Q obtaining the required consent of its lenders to the issue
of the Preferred Stock.
Ends
Enquiries to: R&Q Insurance Holdings Ltd
William Spiegel Tel: +44 020 7780 5850
Tom Solomon Tel: +44 020 7780 5850
Numis Securities Limited (Nominated Adviser and Joint Broker)
Giles Rolls Tel: +44 020 7260 1000
Charles Farquhar Tel: +44 020 7260 1000
Barclays Bank PLC (Joint Broker)
Andrew Tusa Tel: +44 020 7632 2322
FTI Consulting (Media Relations)
Tom Blackwell / Shipra Khanna Tel: +44 020 3727 1051
Notes to Editors:
About R&Q
R&Q is a global non-life specialty insurance company. We
operate two core businesses: Program Management and Legacy
Insurance. Both these businesses are leaders in their respective
markets.
Our approach is to deploy our origination and underwriting
capabilities, alongside our licensed and rated carriers in the US,
EU, and the UK, to generate attractive fee returns in Program
Management and Legacy Insurance.
Legal Entity Identifier (LEI): 2138006K1U38QCGLFC94
Website: www.rqih.com
This announcement contains inside information as stipulated
under the UK market abuse regulation no 596/2014, which is part of
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END
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