R&Q Insurance Holdings Ltd. announced it will file for a provisional liquidation in Bermuda – after it had it had exhausted strategic alternatives for a financial rescue.
At the same time, R&Q said the proposed sale of 100% of its program management business, Accredited, to Onex Corp., the Toronto-based private equity company, will go forward.
R&Q has faced deepening financial struggles as a result of adverse loss development in its core legacy acquisition business, unexpected costs and expenses connected to the sale of Accredited, as well as the inability to consummate external legacy transactions.
When negotiations became bogged down as a result of R&Q’s financial woes, Onex suggested the liquidation option as part of an “alternative proposal” to be considered in the event that the original sale agreement could not be met.
Meanwhile, R&Q, Onex and their representatives had continued discussions, hoping to implement the deal with its original terms, which was first announced on Oct. 20, 2023. As per the original agreement, Onex would purchase 100% of R&Q’s equity interest in Randall & Quilter America Holding Inc., the holding company of Accredited, for a purchase price of $465 million.
“Following the board’s exploration and evaluation and taking all other relevant factors into consideration, including the cash resources currently available to the company,” the board concluded in its June 19 update that liquidation (i.e., the alternative proposal) represents the best option to secure value for R&Q.
At the request of the company, trading on the London Stock Exchange’s Alternative Investment Market (AIM) has been temporarily suspended starting at 7:30 a.m. on June 19, “pending clarification of the company’s financial position,” according to an AIM notice.
The R&Q board said it will be filing for provisional liquidation in Bermuda in due course and it expects the sale of Accredited to Onex to then be implemented through that process.
“The provisional liquidators would then look to realise value from the company’s remaining assets, at the end of which the remaining company would be wound up,” R&Q said. “The directors believe that, in those circumstances, there will be very little, if any, chance of any value accruing to the company’s shareholders.”
For several years, R&Q has been attempting to restructure the company, namely by raising capital and selling assets. R&Q intended to use the proceeds of the Accredited sale to cut its debt load. (In 2022, the company acknowledged its capital position was being hit by the new IFRS accounting standards, implemented in 2023.)
The company’s program management business, Accredited, reported $1.8 billion of gross written premiums in 2022, while its legacy management business, R&Q Legacy, has approximately $2.2 billion of gross liabilities under management.
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