R&Q credit rating downgraded

Ratings agency AM Best has downgraded the rating of R&Q Insurance Holdings Ltd and withdrawn at the request of the company.

AM Best has also placed under review with negative implications the financial strength rating of A- of the R&Q subsidiaries known collectively as the Accredited group.

AM Best has also warned that the failure of R&Q to execute the divestment of the group would likely result in negative rating pressure for Accredited.

The moves come after R&Q, the non-operating holding company of the overall R&Q group, reported an IFRS loss of $297 million in 2022 and the consequent decline in its reported capital and surplus by more than 50% at year-end 2022.

AM Best said: “The assessment considers subsequent actions taken by management to strengthen the R&Q group’s balance sheet, along with expected improvements that are likely following the planned divestment of the Accredited sub-group.”

It added: “Accredited is assessed as a separate non-lead rating unit of the R&Q group. The ratings reflect Accredited’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

“In addition, the ratings reflect a neutral impact from the sub-group’s ownership by R&Q. Despite pressure on R&Q’s rating fundamentals, AM Best considers Accredited’s balance sheet to be somewhat insulated over the near term.”

AM Best said it would keep Accredited’s ratings under review until after the sale of Accredited was completed.

But it added: “The negative implications reflect execution risk related to Accredited’s planned divestment. The failure of R&Q to effectively dispose of Accredited would likely result in negative rating pressure for Accredited.”