R&Q to be sold to Brickell PC Insurance

Non-life legacy business specialist Randall & Quilter Investment Holdings is being acquired by Brickell PC Insurance Holdings. The firm already has a 23.2 per cent shareholding In R&Q.

The investment firm has agreed to a cash acquisition of the entire issued ordinary share capital of R&Q as well as $100 million of new equity funding through a merger under the Bermuda Companies Act.

R&Q shareholders will get 175p for each share held, a premium of approximately 20 per cent on its 31 March closing price. The acquisition values the business at about £482 million. Brickell, backed by Miami-based alternative investment firm 777 Partners, will also invest $100 million to de-lever R&Q’s balance sheet and improve the group’s financial profile following an in-depth review of the group’s legacy Insurance portfolio by new management. The group anticipates achieving c.$90 million in run-rate pre-tax operating profit by the end of the 2023 financial year.

The acquisition and funding are conditional on approval by R&Q shareholders, receipt of regulatory clearances and other requirements. A circular will be posted around the week of 25 April 2022, with the general meeting held around 23 May. The acquisition is expected to become effective in April 2023.

R&Q Directors will recommend the deal to shareholders.

“Having agreed with Brickell the terms for a recommended cash acquisition of R&Q and $100 million new equity funding, the Board of R&Q is unanimous in its belief that this represents the best outcome for our shareholders,” said William Spiegel, executive chairman of R&Q. “The acquisition provides shareholders the opportunity to crystallise the value of their holdings, in cash, and at a material 20% premium to our undisturbed share price, and a substantial 1.82x multiple of expected FY 2021 tangible net asset value per share, while also providing $100 million in new equity funding to de-lever our balance sheet and improve our financial profile.

“Furthermore, the offer demonstrates the strength of both our business today and the opportunities ahead of us. The value Brickell sees in R&Q is testament to the clear strategic vision we have outlined, the quality of our legacy insurance and program management businesses and the skills and expertise of our people. Brickell is a long-term strategic partner that has a deep understanding of our business and our markets, and has bought into our five-year plan to transform R&Q into a fee-based, capital lighter business.

“In addition to enabling our shareholders to realise attractive value, we also believe that an acquisition by Brickell would be an excellent outcome for our trading partners and employees, with Brickell’s existing presence and significant ambitions in the fronting and legacy sectors highly complementary to our business.”

Steven Pasko, chairman of Brickell, said: “We have enjoyed a strong relationship with R&Q as a shareholder since 2019 and further supported the business with an infusion of capital in 2020. We are excited about the prospect of integrating R&Q into our robust insurance ecosystem and expanding our business into the legacy space, by combining R&Q’s deep experience in managing complex run-off claims with 777’s unique asset management capabilities.”