Nearly $41m of the consideration would be made in cash on deal completion. Credit: Rock Staar on Unsplash

R&Q Insurance Holding has agreed to offload its 40% minority stake in New York-based managing general agent TPM Holdings USA (Tradesman) to pay down debt.

The stake will be sold to Roosevelt Road Capital Partners, which currently has a 60% holding in Tradesman.

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As of 31 December 2022, Tradesman’s net debt stood at $67m.  

Nearly $41m of the total consideration of $47m would be made in cash on deal completion.

The remaining $6m payment will be made as a two-year promissory note.

R&Q also plans to utilise the deal proceeds for general corporate purposes.

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Subject to Tradesman’s lender clearance, the deal is scheduled to close in the first quarter of this year.

The contribution of Tradesman to the group profit in the 2021 financial year was $11.2m while in the first half of 2022 its contribution was $5.2m.

“Tradesman is expected to earn $26.5 million in EBITDA in 2022, which could be reduced by up to $9 million if the maximum contingent commissions became payable to reinsurers should the programme underperform expectations,” R&Q said in a statement. 

Besides, R&Q reported its programme management update for the 12 months ending 31 December 2022, which it called a ‘record’ year.

Full year gross written premium jumped 80% to $1.8bn from $1bn, while full year programme fee income increased 78% to $80m.

R&Q executive group chairman William Spiegel said: “2022 was an outstanding and record year for our Program Management business, and I am pleased that we have exceeded our target to deliver $1.75 billion in Gross Written Premium, despite the exchange rate headwinds of a strong US dollar on our European business.”