LONDON: Randall & Quilter Investment Holdings Ltd., the global program management and legacy acquisitions specialist, announced US$100 million of new equity investment into the group.
The new investment includes a US$80 million subscription by Brickell Insurance Holdings LLC, an investment vehicle controlled by 777 Partners, for a new series of preferred stock issued by Randall & Quilter PS Holdings Inc., an indirect wholly owned subsidiary of R&Q, which are exchangeable for ordinary shares in the capital of the Company at a price of £1.35 per Ordinary Share.
And a US$20 million subscription by funds managed by Hudson Structured Capital Management Ltd. for 11,902,318 new Ordinary Shares at a price of £1.35 per Subscription Share.
In a joint statement, the Executive Directors of the Company, Ken Randall, Alan Quilter and William Spiegel, commented on the Investment and said: “We are extremely pleased to have raised these funds. We have long been clear on the significant opportunities we see for the Group in the two fast growing markets we operate in: program management and legacy. It has become apparent that the market dislocation currently being experienced will only increase demand for these specialist capabilities as the balance sheets of traditional insurance companies come under increased strain. The equity we have secured will enable us to proactively and quickly move to capitalise on these dynamics as the market seeks the solutions R&Q is able to provide.
“777 Partners and Hudson Structured are investment firms we have known and admired for many years, with 777 Partners, through Brickell, already an important stakeholder in R&Q. Both are highly regarded investors within the insurance industry, and their investment is a testament to R&Q’s reputation as a leader in our two specialty insurance businesses.”
The Executive Directors also commented on the effect of Covid-19 on R&Q’s employees and existing business: “Employee safety, security and health is our paramount concern. As a result of Covid-19 we implemented our Business Continuity Plan across all our offices. We are pleased to report that our team is successfully working from home and operating in a “business as usual” manner in all of our business locations.
“We believe the outbreak of the pandemic will have a limited impact on the Group’s existing business. Whilst there will be some near-term delay in completing transactions, we believe the impact of the pandemic on the wider insurance industry will create considerable future opportunity for the Group. Our existing legacy books have limited exposure to unexpired risk, our program management portfolios are largely reinsured with highly rated counterparties, and our investment portfolio has an average duration of 2 years with approximately 92% of our investments rated BBB or better of which approximately 51% is in government bonds and cash. Our conservative investment portfolio has resulted in net unrealised losses of only 1.4%% as of 22 April 2020.”
Commenting on 2019 results, Randall, Quilter and Spiegel said: “2019 was a record year for the Group. We currently expect that the Group’s pre-tax result for the year ending 31 December 2019 will be in line with management’s expectations, although the result is still subject to completion of customary auditing review procedures. Typical of the experience across the market, finalisation of the audit of the Group’s financial results for 2019 has been delayed and we will confirm in due course the expected date for release. In addition, the Group expects to continue its history of paying a return to shareholders, although this year, in light of the wider macro environment this will be in the form of additional ordinary shares. The Group will assess the quantum and nature of its future distributions once there is better understanding of the trading environment post Covid-19.”
Josh Wander, Founder and Managing Partner at 777 Partners commented: “We are excited to continue to support R&Q’s growth as a world class underwriter and servicer of specialty risk. Since our initial investment, Ken, Alan and now William have consistently validated 777’s strategy of investing in best in class management teams who deploy a thoughtful approach to prudent risks with asymmetric upside. We are confident that fresh, flexible capital will enrich shareholder value by facilitating R&Q’s ability to execute on the boundless opportunity resulting from prevailing market conditions.”
Michael Millette, Founder and Managing Partner at Hudson Structured said: “Hudson Structured is delighted to join Randall & Quilter as an equity investor. We see exciting growth opportunities in the legacy and program management businesses and believe that R&Q’s management team are well positioned to address them.”
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