R&Q credit ratings under review after merger agreement
The long term issuer credit ratings of Bermudian-headquartered Randall & Quilter Investment Holdings Ltd have been placed under review with developing implications by AM Best.
R&Q has a long-term ICR of “bbb-” (Good).
AM Best said the credit rating actions follow the announcement on Friday that Brickell PC Insurance Holdings LLC will acquire, in cash, the remainder of shares in R&Q that it does not currently own, subject to shareholder and regulatory approval.
The developing implications reflect uncertainties surrounding R&Q’s prospective risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, and its final ownership structure.
The agency said the ratings will remain under review with developing implications until AM Best has sufficient clarity over the group’s rating fundamentals following its acquisition.
R&Q additionally plans to issue $100 million of convertible preference shares to Brickell, subject to shareholder approval.
The funding materially restores R&Q’s capital base following an expected IFRS loss for 2021 of $135 to $145 million. Of this, approximately $90 million relates to a non-cash charge due to the impairment of an asset relating to a structured reinsurance contract, which is likely to be commuted.
Despite its poor IFRS result for 2021, AM Best said, R&Q’s underlying book of business is performing well, and the group has good growth opportunities in its two core business lines. Its business strategy is not expected to change as a result of the change in ownership.
The agency has also placed under review with developing implications the financial strength rating of A- (Excellent) and the long-term issuer credit ratings of “a-” (Excellent) of Florida-based Accredited Surety and Casualty Company Inc, Arizona-based Accredited Specialty Insurance Company and Accredited Insurance (Europe) Limited of Malta.
The three companies are wholly owned subsidiaries of R&Q.
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