Special insurer goes into free fall after reporting loss | Insurance business America
The company begins selling stores to address profitability issues
Insurance News
By Ryan Smith
According to a report from MarketWatch, shares of R&Q Insurance Holdings fell 45% after the company said it would report a significant pre-tax loss for the year.
At 7:45 a.m. GMT, shares were at three pence, down 2.49 pence. According to MarketWatch, R&Q shares have fallen 95% in the last 12 months.
R&Q said on Friday that the loss was due to rising costs and a lack of reserves in its legacy insurance business.
The insurer said in a press release that it expects reserves from its legacy insurance business to decline by 23% in 2023.
“This primarily concerns the development of tail claims as well as the development of inflation and abuse losses across the portfolio,” R&G said.
R&Q said its reserves were about $1 billion at year-end 2023. However, the sale of its corporate debt joint venture Sag Main will reduce that value to about $670 million, it said.
R&Q announced that it would sell its 49 percent stake in the joint venture to Obra Capital Management for $27 million in cash and $3 million in Randall & Quilter PR preferred stock, currently held by Obra .
“We are pleased with the strong return on our investment in the joint venture and this agreement is consistent with our goal of creating value from our legacy insurance business,” said Jeff Hayman, chairman of R&Q. “While we believe the corporate debt market continues to represent an attractive long-term opportunity, evolving regulations – including potential changes to capital requirements – have reduced the strategic attractiveness of direct equity participation in joint ventures of this type for R&Q.”
R&Q will use some of the money raised from the sale to repay its revolving credit facility, MarketWatch reported.
R&Q announced last year that its program management business had been accredited to private equity platform Onyx Partners. The European Commission approved the deal last month. R&Q said the sale would allow it to “implement significant financial deleveraging” and “return the capital solvency position to target levels”.
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2024-04-12 16:26:13
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