The credit ratings of Randall & Quilter Investment Holdings and its subsidiaries have been revised to under review, negative, from developing by AM Best.
The ratings revision was issued after R&Q announced that its acquisition by Brickell PC Insurance Holdings LLC had been terminated by Brickell. (See related article).
Under the terms of the original agreement, announced in April, Brickell had planned to buy R&Q for £482 million ($609.4 million) in cash, as well as $100 million of new equity funding.
The ratings agency explained that the $100 million in funding from Brickell would have mitigated the impact of an expected IFRS (International Financial Reporting Standards) loss for 2021 of between US$135 million and US$145 million on R&Q’s capital base.
Last week, R&Q made alternative plans for an equity raise of $100 million, which is expected to complete on July 12, 2022. “The revision of the implications of the under-review status to negative from developing reflects the risk that the equity raise will not complete and that R&Q’s risk-adjusted capitalization will not return to historical levels,” said AM Best in its R&Q ratings announcement, issued on May 27.
R&Q operates two core businesses: program management and legacy insurance.
AM Best’s credit rating announcement covers the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of R&Q’s wholly owned subsidiaries: Accredited Surety and Casualty Company Inc.; Accredited Specialty Insurance Co., and Accredited Insurance (Europe) Ltd. in Malta.
Concurrently, the ratings revision included the Long-Term ICR of “bbb-” (Good) of Bermuda-based Randall & Quilter Investment Holdings Ltd., which is the non-operating holding company of the group.
R&Q’s credit ratings reflect its “balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.”
The ratings will remain under review until AM Best has certainty around R&Q’s capital position.
Source: AM Best
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