Randall & Quilter Investment Holdings (R&Q) has announced the sale of its Insurance Services and Captive Management Operations to consultancy and digital solutions provider Davies Group, at an agreed valuation of £20 million (US$28mn).
Davies will pay a net cash consideration, after deducting net debt applicable to the businesses, of approximately £18.6 million (US$25.6mn) to acquire the entire share capital of JMD Specialist Insurance Services Group and its subsidiaries, R&Quiem, John Heath & Company and AM Associates Insurance Services as well as Randall & Quilter Bermuda Holdings and its Quest subsidiaries.
Ken Randall, R&Q Chairman and Chief Executive Officer (CEO), commented; “The sale of our Insurance Services and Captive Management operations is a significant milestone in the Group’s decision to simplify its operations and focus on our core areas of legacy acquisitions and the writing of quality programme business, which is mostly reinsured to highly rated reinsurers.
“The Insurance Services and Captive Management operations are market leading, well-developed and scalable and we are confident the operations will prosper under the stewardship of Davies.
“As we have progressed discussions with Davies we have developed a good working relationship and hope to be able to develop business between our two organisations in the future.
“The sale will enable us to focus further on our core operations where we remain excited about the growth potential in the current year and beyond, underpinning the Group’s financial performance and distribution policy.”
The transaction provides for a post completion adjustment in relation to working capital requirements, but the overall impact of the disposal on R&Q is expected to be broadly neutral to book value and earnings after allowance for transaction expenses, related incentive payments, working capital adjustments and goodwill being written off.
As anticipated in the October 2017 Share Placing, R&Q said the transfer will result in a consequential uplift to the firm’s tangible net assets of approximately £12 million of value from goodwill to cash.
The net proceeds of the sale will be deployed to help finance the growing legacy transaction pipeline, especially in the U.S. and Lloyd’s, and to generate commission income from the use of Accredited and Malta’s direct licenses.
