TIDMRQIH
RNS Number : 3010T
R&Q Insurance Holdings Ltd
14 November 2023
R&Q Insurance Holdings Limited
Update on Proposed Sale of Accredited
14 November 2023
On 20 October 2023, R&Q Insurance Holdings Ltd (AIM-RQIH)
("R&Q") announced the proposed Sale of Accredited to Onex
Corporation (the "Announcement"). Capitalised terms used, but not
defined, in this announcement have the meaning given to such terms
in the Announcement. The full announcement can be found here:
https://www.rqih.com/news
As explained in the Announcement, the transaction is conditional
on R&Q shareholder and regulatory approval as well as customary
consents from certain R&Q debt providers. R&Q continues to
work expediently towards satisfying these conditions and closing of
the Sale is expected to occur in late Q1 2024 or early Q2 2024.
In the Announcement, R&Q provided a brief summary of its
future strategy for R&Q Legacy, on the assumption that the Sale
achieves a successful conclusion. Although completion of the Sale
continues to be conditional on the factors noted above, the Board
recognises shareholders' interest in better understanding the
profile of R&Q Legacy as a standalone business. Accordingly,
R&Q today announces the publication of a presentation on
R&Q Legacy (the "Presentation") which can be found on R&Q's
website via the link:
https://www.rqih.com/investors/shareholder-information/investor-presentations/
The Presentation provides further detail on R&Q's envisaged
strategy, market position and financial objectives as a refocused
global legacy company, should the Sale successfully close.
As previously announced, upon closing of the Sale, Jeff Hayman
will act as Chairman and Interim Chief Executive Officer of R&Q
and Paul Bradbrook, currently Chief Accounting Officer of R&Q,
will become Chief Financial Officer of R&Q and a member of the
Board, subject to customary approvals. The Presentation also
outlines R&Q Legacy's wider management team and its significant
collective experience. The management team is excited by the growth
opportunity it sees within R&Q Legacy's addressable market. In
the Presentation, management has set out three strategic priorities
through which it believes R&Q Legacy can deliver growth and
value creation:
-- Grow fee income
-- Reduce expenses
-- Decrease balance sheet volatility
Underpinning these priorities are strategic initiatives
currently underway to de-risk the R&Q Legacy portfolio
including:
-- A possible LPT (Loss Portfolio Transfer) or ADC (Adverse
Development Cover) on certain portfolios
-- The sale of non-core assets
-- The sale, or securitization, of back book legacy liabilities
In the Presentation, R&Q provides an associated plan for the
R&Q Legacy business, although it should be stressed that the
ability of R&Q Legacy to achieve such objectives depends on
many factors, including not least a successful closing of the Sale
and the paydown of R&Q debt. This plan includes that:
-- The refocused business and strategy is expected to deliver
operating profitability by full year 2025
-- Fee income is targeted to be doubled in 2025 compared to H1 2023 annualised
-- Expenses are anticipated to be reduced by 15% to 20% in 2025
relative to an adjusted annualised H1 2023 expense base that
includes certain assumptions around Legacy's standalone cost
structure
-- As R&Q returns to profitability, it will review its
dividend policy, subject to constraints due to relationships with
lenders, regulators and preferred shareholders
The Presentation also outlines R&Q's expectation of $100m+
of cumulative surplus capital to be generated over the next 5 years
as claims payments are made, releasing capital held against
reserves. This is in addition to the estimated $40m - $80m of
additional collateral R&Q will be required to hold against
existing legacy exposure retained by Accredited, which R&Q
expects to be released and available over the next 5+ years as the
underlying exposures are reduced and eliminated.
Jeff Hayman, Chairman of R&Q , said: "We recognise the
importance of giving our shareholders a clear vision around
R&Q's future as a refocused global legacy company, should the
proposed Sale of Accredited to Onex achieve a successful
conclusion. The Presentation further outlines our belief that
R&Q can build significant value as a standalone legacy business
and the clear strategy we have to return the business to operating
profitability, materially reduce balance sheet volatility and
establish a stronger capital position. Building our Reserves Under
Management is an important part of this strategy, and we have also
provided detail on the strength of our management team and their
extensive experience in non-life run-off, our large and addressable
market opportunity and the active nature of our pipeline. We look
forward to continuing to engage with all of our stakeholders."
As stated above, the plan is based on many assumptions,
including shareholder and regulatory approvals of our proposed Sale
and consent from our lenders. A more detailed explanation of the
Sale is included in our announcement of 20 October 2023. The
Presentation should be read in conjunction with that
announcement.
Ends
Enquiries to: R&Q Insurance Holdings Ltd Tel: +44 (0)20 7780 5850
Jeff Hayman
William Spiegel
Tom Solomon
Fenchurch Advisory Partners LLP (Financial Adviser) Tel: +44 (0)20 7382
2222
Kunal Gandhi
Brendan Perkins
John Sipp
Richard Locke
Tihomir Kerkenezov
Barclays Bank PLC (Financial Adviser and Joint Broker) Tel: +44 (0)20
7632 2322
Gary Antenberg
Richard Bassingthwaighte
Grant Bickwit
Howden Tiger (Financial Adviser) Tel : +44 (0)20 7398 4888
Rob Bredahl
Leo Beckham
Deutsche Numis (Nominated Adviser and Joint Broker) Tel : +44 (0)20 7260
1000
Charles Farquhar
Giles Rolls
FTI Consulting Tel: +44 (0)20 3727 1051
Tom Blackwell
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
Forward-Looking Statements
This announcement contains forward-looking statements with
respect to R&Q and its industries, that reflect its current
views with respect to future events and financial performance.
Statements that are not historical facts, including statements
about R&Q's beliefs, plans or expectations, are forward-looking
statements. These statements are based on current plans, estimates
and expectations, all of which involve risk and uncertainty.
Statements that include the words "expect," "intend," "plan,"
"believe," "project," "anticipate," "may", "could" or "would" or
similar statements of a future or forward-looking nature identify
forward-looking statements. Actual results may differ materially
from those included in such forward-looking statements and
therefore you should not place undue reliance on them.
A non-exclusive list of the important factors that could cause
actual results to differ materially from those in such
forward-looking statements includes: (a) changes in the size of
claims relating to natural or man-made catastrophe losses due to
the preliminary nature of some reports and estimates of loss and
damage to date; (b) trends in rates for property and casualty
insurance and reinsurance; (c) the timely and full recoverability
of reinsurance placed by R&Q with third parties, or other
amounts due to R&Q; (d) changes in the projected amount of
ceded reinsurance recoverables and the ratings and credit
worthiness of reinsurers; (e) actual loss experience from insured
or reinsured events and the timing of claims payments being faster
or the receipt of reinsurance recoverables being slower than
anticipated; (f) increased competition on the basis of pricing,
capacity, coverage terms or other factors such as the increased
inflow of third party capital into reinsurance markets, which could
harm R&Q's ability to maintain or increase its business volumes
or profitability; (g) greater frequency or severity of claims and
loss activity than R&Q's underwriting, reserving or investment
practices anticipated based on historical experience or industry
data; (h) changes in the global financial markets, including the
effects of inflation on R&Q's business, including on pricing
and reserving, increased government involvement or intervention in
the financial services industry and changes in interest rates,
credit spreads, foreign currency exchange rates and future
volatility in the world's credit, financial and capital markets
that adversely affect the performance and valuation of R&Q's
investments, financing plan and access to such markets or general
financial condition; (i) changes in ratings, rating agency policies
or practices; (j) the potential for changes to methodologies,
estimations and assumptions that underlie the valuation of
R&Q's financial instruments that could result in changes to
investment valuations; (k) changes to R&Q's assessment as to
whether it is more likely than not that it will be required to
sell, or has the intent to sell, available-for-sale debt securities
before their anticipated recovery; (l) the ability of R&Q's
subsidiaries to pay dividends; (m) the potential effect of
legislative or regulatory developments in the jurisdictions in
which R&Q operates, such as those that could impact the
financial markets or increase their respective business costs and
required capital levels, including but not limited to changes in
regulatory capital balances that must be maintained by operating
subsidiaries and governmental actions for the purpose of
stabilising the financial
markets; (n) the actual amount of new and renewal business and
acceptance of products and services, including new products and
services and the materialisation of risks related to such products
and services; (o) changes in applicable tax laws, tax treaties or
tax regulations or the interpretation or enforcement thereof; (p)
the effects of mergers, acquisitions, divestitures and
retrocession.
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END
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