FEBRUARY 13, 2019 08:21 AM (EST)
AM Best Affirms Credit Ratings of Randall & Quilter Investment Holdings Ltd. and Its Members
FOR IMMEDIATE RELEASE
LONDON - FEBRUARY 13, 2019 08:21 AM (EST)
The ratings of ASCC and AIEL reflect the consolidated balance sheet strength of R&Q [AIM: RQIH], which AM Best categorises as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The rating of R&Q, as a non-operating insurance holding company, is determined by reference to the credit assessment of R&Q on a consolidated basis, and the normal subordination of holding company creditors to operating company policyholders.
As wholly owned entities of R&Q, ASCC and AIEL are strategically important to and integrated within the Randall & Quilter group (collectively referred to as the group). They are pivotal to the group’s growing program business, providing insurance services to managing general agents, and hold essential licences for legacy business in the United States and Europe.
The group’s balance sheet strength is underpinned by its risk-adjusted capitalisation being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Offsetting rating factors include AM Best’s expectation of increased pricing and reserving risk with business growth, moderate financial leverage and increasing dependence on reinsurance as program business grows. Operating performance remains adequate, with a track record of profitability in recent years and a five-year weighted average return on equity of 5%. RQIH’s strong profile in the small and medium-sized run-off market helps generate a flow of new profitable run-off acquisitions.
The group announced, on 7 February 2019, the issuance of approximately GBP 107 million of shares via the AIM market, to supplement the issuance of USD 70 million senior subordinated debt on 28 December 2018. The new capital is expected to be used to support liquidity in connection with previously announced acquisitions, to support further growth of the program business and to fund the acquisition of a number of identified legacy targets. While risk-adjusted capitalisation will be bolstered over the short-term by this new capital, it is expected to be utilised fully by business growth over the longer term. The share and debt issues have little impact on the group’s debt leverage ratio.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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