R&Q secures $100m investment to capitalise on market opportunities


Randall & Quilter Investment Holdings has raised $100 million of new equity, which will be used primarily to invest in the growth of R&Q’s programme management and legacy businesses.

The investment includes an $80 million subscription by Brickell Insurance Holdings, an investment vehicle controlled by 777 Partners, for a new series of preferred stock issued by Randall & Quilter PS Holdings, an indirect wholly owned subsidiary of R&Q. The preferred stock are exchangeable for ordinary R&Q shares at a price of £1.35 per ordinary share.

The other $20 million subscription was made by funds managed by Hudson Structured Capital Management, which acquired 11,902,318 new ordinary shares for £1.35 per subscription share.  

The £1.35 price represents a discount of approximately 7.2 percent to the closing mid-market price of 145.5 pence per ordinary share on April 28.  

In a joint statement, executive directors Ken Randall, Alan Quilter and William Spiegel, said: “We have long been clear on the significant opportunities we see for the Group in the two fast growing markets we operate in: programme 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.”

R&Q predicted the pandemic will have a limited impact on its 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,” R&Q’s executives said. 

“Our existing legacy books have limited exposure to unexpired risk, our programme management portfolios are largely reinsured with highly rated counterparties, and our investment portfolio has an average duration of two years, with approximately 92 percent of our investments rated BBB or better, of which approximately 51 percent is in government bonds and cash,” it added. “Our conservative investment portfolio has resulted in net unrealised losses of only 1.4 percent as of April 22, 2020.”

R&Q said it has implemented its business continuity plan across all its offices in response to COVID-19, with its employees working from home and business operating as usual.

R&Q said 2019 had been a record year for the group, estimating its pre-tax result for the year ending December 31, 2019, will be in line with management’s expectations. It noted the final, audited numbers had been delayed, and said it will provide a date for their publication in due course. 

R&Q’s executives praised 777 Partners and Hudson Structured as investment firms they have known and admired for many years, noting 777 Partners, through Brickell, is already an important stakeholder in the company. 

They said the group expects to pay a return to all 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,” R&Q’s executives said.  

Josh Wander, founder and managing partner at 777 Partners, said the fund’s strategy is to invest 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,” he said. 

Michael Millette, founder and managing partner at Hudson Structured, said: “We see exciting growth opportunities in the legacy and programme management businesses and believe that R&Q’s management team are well positioned to address them.”

Randall & Quilter, R&Q, 777 Partners, Hudson Structured Capital Management, Ken Randall, Alan Quilter, William Spiegel, Josh Wander, Michael Millette

Captive International