R&Q files for liquidation
Bermuda-based R&Q Insurance Holdings has filed for provisional liquidation in Bermuda as it tries to complete the sale of its subsidiary Accredited to Canadian investment firm Onex.
R&Q first announced it was selling Accredited for $465 million last November, but the sale hit a number of stumbling blocks including a decision by the Bermuda Monetary Authority to review the company's reserves and to block legacy transactions and the redemption of debt.
R&Q said the move to enter liquidation - which was proposed by Onex - "will result in the prompt closing of the sale of the Company's program management business, Accredited, to funds advised by Onex Corporation".
"The Board believes that this will provide the best possible result in the circumstances for the Company's stakeholders," the company said.
At that time, R&Q announced the Onex sale, it planned to planned to sell Accredited and to continue to operate as a legacy insurer. Chief executive officer William Spiegel and Thomas Solomon, chief financial officer, were to transfer to Accredited and R&Q would seek a new top executive.
However, the sale ran into difficulties when the Bermuda Monetary Authority demanded a review of reserves and blocked several legacy insurance deals. R&Q was also told to pause the redemption of $20 million worth of notes.
R&Q was then forced to strike a stand-still deal with creditors in late April.
It said last week that efforts to salvage the deal had brought “significant additional unexpected costs and expenses” while binding R&Q's hands on its rump legacy business to render a “material impact on the Company's stability as a business and as a going concern”.
Onex them made the alternative proposal put the parent company into provisional liquidation and to complete the sale via that process. Remaining R&Q assets would also likely be sold off.
“In such circumstances there would be very little, if any, chance of any value accruing to the Company's shareholders,” R&Q management warned. "If the sale does not proceed on its original terms and the available net cash proceeds are not available to facilitate a financial de-leveraging of R&Q, R&Q will not be able to repay its debt facilities as they become due, and R&Q would therefore be unable to continue as a going concern."
R&Q also announced today it had sold its UK-based legacy general insurance company, Inceptum, to Malta-based legacy acquirer Marco Capital Holdings for $11.25 million in cash.
Inceptum Insurance Company, regulated by the PRA and FCA, was acquired by R&Q from Vibe in 2020. The sale agreement includes the transfer of 100% of Inceptum’s shares to Marco, along with the novation of any related reinsurance arrangements with other R&Q entities, including Accredited Insurance Europe (AIEL). As of December 31, 2023, Inceptum had estimated net assets of £19 million and reported a loss of £2 million for the year.
The transaction is conditional on the completion of the sale of the shares in Accredited to Onex. It is subject to the completion of certain reinsurance agreements, between R&Q entities, Accredited Insurance Europe (AIEL), and R&Q Re (Bermuda) and Inceptum being novated to Marco Re.
The deal has received necessary R&Q board approvals, but it still requires change of control approval by the PRA and other regulatory approvals as required for the reinsurance agreements.
R&Q will receive £11.25 million in cash for the sale of Inceptum’s shares. Including the impact of the novated reinsurance arrangements, the transaction is expected to generate approximately £13 million in liquidity for the company. The cash proceeds from the sale are anticipated to be received by the third quarter of 2024.
