Non-life speciality insurer R&Q Insurance Holdings has received a capital infusion of $50m from Scopia Capital Management, which is one of its biggest shareholders.
There is also the provision to boost the amount of equity raised to $60m.
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Scopia subscribed for preferred stock issued by Randall & Quilter PS Holdings, an indirect subsidiary of R&Q, for $50m.
At Scopia’s will, the preferred stock could be exchanged into new ordinary shares of R&Q at a 10% premium to the 20-day volume-weighted average price before the agreement.
The infusion will support the separation of the firm’s legacy insurance R&Q Legacy and programme management Accredited businesses.
These two businesses will currently run under the group’s two separate holding companies.
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By GlobalDataThe capital injection would be used to boost R&Q Legacy’s capitalisation and for general corporate purposes, as Accredited would not pay intra-group dividends to receive its financial strength rating from AM Best.
The separation is a prerequisite to help Accredited secure AM Best’s own subgroup financial strength rating.
R&Q has obtained all essential clearances to finalise this internal overhaul.
The group is currently assessing strategic deals with third parties to help Accredited run independently.
It is also weighing a potential divestment of Accredited and said it has received expressions of interest from various parties.
Several strategic alternatives are also being evaluated for R&Q Legacy.
Announcing the Q1 2023 update for Accredited, R&Q said that the business saw a 34% surge in gross written premiums from the year-ago quarter to $0.5bn.
Programme fee income increased 24% to $22m from $18m over the period.
R&Q CEO William Spiegel said: “This additional capital, alongside our completed internal reorganisation, means Accredited and R&Q Legacy can be established as stand-alone entities within R&Q.
“2023 has seen Accredited continue its strong momentum and leadership position in the programme market, achieving a record first quarter in terms of GWP and Fee Income.”
