In a unanimous decision, the Non-Executive Directors of non-life specialty insurer R&Q have recommended the separation of its business through a proposed sale.
The directors assert that this move is in the best interests of R&Q, its shareholders, and other stakeholders.
The proposed sale, which hinges on shareholder approval at a Special General Meeting, aims to refocus R&Q as a legacy insurance business with a platform boasting over 100 personnel and Reserves Under Management exceeding $1.0 billion.
The Non-Executive Directors emphasise that the Sale represents the sole executable alternative available to R&Q at present, providing what they consider the best opportunity for shareholders to realise the highest potential value.
Additionally, they believe the Sale offers the most certainty for Accredited, a key entity within R&Q, to maintain its independent financial strength rating of ‘A-‘, crucial for safeguarding its value.
Furthermore, the Sale is viewed as instrumental in facilitating a substantial financial de-leveraging, a strategic move to enhance the retained business’s ability to execute R&Q’s existing strategy. This strategy involves transitioning R&Q Legacy into a capital-efficient and stable recurring fee-based business model.
The directors caution R&Q shareholders that the success of the Sale is contingent on their approval at the Special General Meeting. Failure to secure this approval would result in the Sale not proceeding.
The directors assert that the Sale is crucial for achieving a complete separation and deconsolidation of Accredited from the Group, a prerequisite for Accredited to maintain its fully independent financial strength rating.
Moreover, the Board expresses concerns about the current financial leverage of R&Q, deeming it unsustainable.
Failure to proceed with the Sale and utilise the Available Net Cash Proceeds for financial de-leveraging could lead to challenges in repaying debt facilities and potentially jeopardise R&Q’s ability to continue as a going concern.
R&Q is actively engaged in discussions with its lending banks, credit providers, and other financing entities to secure necessary support for the Sale.
The Board underscores the potential consequences of a default or cross-default on existing debt facilities, which could prompt lenders to take actions to protect their interests, potentially resulting in adverse outcomes for R&Q and its stakeholders.
In light of these considerations, the Non-Executive Directors unanimously recommend that shareholders vote in favor of the Resolution at the Special General Meeting.
On October 20, R&Q Insurance Holdings confirmed that it had entered into a conditional agreement to sell its Accredited program Management business to private equity investment manager Onex Corporation.
