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R&Q shares plummet as company warns of significant loss in 2024

12th Apr 2024 10:50

(Alliance News) - R&Q Insurance Holdings Ltd on Friday said it expects to make a "significant pretax loss" this year.

R&Q shares were down 45% to 3.04 pence each in London on Friday morning.

The Bermuda-based non-life speciality insurance company said an agreement has been reached for Obra Capital Inc to acquire the entirety of R&Q and its affiliates 49% interest in the joint venture between the two companies, Sag Main Holdings LLC.

Established in 2022, the joint venture between R&Q and Obra holds entities with legacy non-insurance corporate liabilities. Last year R&Q received USD7 million in fee income from the venture.

Under the terms of the agreement, R&Q will handover its stake for a cash consideration of USD27 million alongside USD3 million in preference shares held by Obra in Randall & Quilter PS Holdings Inc.

R&Q Chair Jeff Hayman said: "We are pleased with the strong return on our investment...Although we believe that the corporate liabilities market continues to represent an attractive long-term opportunity, developing regulations, including potential changes around capital requirements, have reduced the strategic attractiveness."

Furthermore, the company continues to make progress with the sale of its 100% interest in Randall & Quilter America Holding Inc which holds its Accredited programme manager business.

The company said: "The sale will enable the board to undertake a material financial de-leveraging of R&Q and return the capital solvency position back to target levels, enhancing the business' ability to execute the board's existing strategy of transitioning R&Q Legacy to a capital efficient and stable recurring fee-based business model."

R&Q Legacy, which provides solutions to owners of discontinued insurance businesses, ended 2023 with USD1 billion in reserves under management. Following the sale of the corporate liabilities business, this will reduce by approximately USD670 million.

In light of this, R&Q anticipates a significant pretax loss for the year driven by the negative development relating to Legacy and rising corporate costs from the sale of Accredited.

By Elijah Dale, Alliance News reporter

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