William Spiegel, Group CEO, commented on the outlook for R&Q Insurance Holdings (LON:RQIH):
Our immediate focus remains the separation of Accredited and R&Q Legacy. This process is progressing well, with the legal separation of these entities achieved in Q2 2023, as planned, and the recognition by AM Best of Accredited as an independent rating unit, with an A- financial strength rating. As we continue to assess the strategic options for both businesses, we expect to provide further updates over the course of 2023.
We believe the outlook is strong for Accredited and R&Q Legacy. Both businesses have excellent pipelines and, while we remain highly disciplined, we are confident of growing GWP and Reserves Under Management in each business respectively.
Chairman’s Statement
I was pleased to be appointed Independent Non-Executive Chair in March 2023. Since joining I have spent time getting to know our businesses Program Management (Accredited) and Legacy Insurance (R&Q Legacy), our people and our shareholders.
Clearly both of R&Q’s two businesses have excellent fundamentals: they are well established players in attractive non-life insurance niche segments, enjoy high barriers to entry, have high quality management teams and employees with strong technical expertise, and they both have well established reputations in the market.
However, it is also important to acknowledge 2022’s challenges. These included continued volatility and adverse development in our older legacy books as well as a number of corporate events that absorbed significant Board and management time. In addition, the company oversaw extensive and ongoing internal transformation to ensure its people, technology, risk management, culture and governance are appropriate to support R&Q’s strategic and growth ambitions.
On an underlying basis, I believe the picture is encouraging. Accredited has established itself as a genuine leader with exciting growth. At the same time R&Q Legacy is building momentum in its strategic transformation, albeit at a slower pace than originally envisaged given the need for prudence in a softer legacy market. The joint venture with Obra Capital to acquire MSA Safety, post-period end, is also indicative of a meaningful opportunity to provide solutions for corporate liabilities through partnerships with third-party capital, adding to what is now a sizeable pool of reserves managed by R&Q Legacy.
The focus for R&Q therefore needs to be unlocking the value within both businesses. Doing this will create more opportunity for our people, stronger counterparties for capital and trading partners, and greater returns for our shareholders.
Although transitioning to a fee-oriented business, R&Q Legacy has a more volatile earnings profile than Accredited, which could impact the financial strength rating critical to Accredited.#
It is therefore clear to the Board that achieving our objective of unlocking value in each business is best managed through a separation of Accredited and R&Q Legacy. William will discuss this further in his 2022 in review.
My appointment as Independent NonExecutive Chair has also enabled R&Q to move to a corporate governance structure that is better aligned with best market practice. As Executive Chair, the role William was undertaking was far closer to that of Group CEO and it is appropriate that this is now formalised.
Since starting my role, I have been deeply impressed by the calibre of R&Q’s Leadership Team, many of whom have joined in the last two to three years. William has assembled a bench with deep experience across insurance, capital markets and financial services. This has been particularly important given the extensive transformation that has taken place within the business to ensure it has the technology, platforms and processes required to support the growth of Accredited and R&Q Legacy. This has included substantial changes to make R&Q a more efficient business, improve its risk management and governance practices and build a stronger culture that can attract and retain the talent we need.
The Board and I are focused on supporting the Leadership Team as they continue to drive these essential changes, while also pursuing the strategic separation of our two businesses. Since coming into the business, my confidence in the inherent value within R&Q has only increased. I firmly believe we have the right team and strategy to realise these objectives.
Jeffrey Hayman
Independent Non-Executive Chair
28 June 2023
