Randall & Quilter agrees sale of R&Q Managing Agency

AIM-listed Randall & Quilter has agreed to sell Lloyd's managing agency, R&Q Managing Agency, to Boston-based medical professional liability insurance provider Coverys.

The sale is in line with the group's previously announced decision to simplify operations to focus on its core, high-growth activities, which include the acquisition/assumption of run-off portfolios and the use of its licensed companies in the US and EU as conduits for niche and profitable books of P&C business, primarily to highly rated reinsurers.

On completion, Coverys will make a cash payment of $22.6m to R&Q, which after costs and related incentive payments will result in net proceeds of around £13.9m. This is expected to generate a gain of approximately £12.6m over the carrying cost of RQMA in the group's 2016 audited accounts.

Net proceeds from the sale will be used to help finance the ever-growing legacy transaction pipeline, especially in the US and Lloyd's, and to generate valuable commission income from the use of Accredited and Malta's direct licenses.

Chairman and chief executive officer Ken Randall said: "The proposed sale of our Lloyd's managing agency is a significant milestone in the group's decision to simplify its operations and focus on our core areas of legacy acquisitions and management and the provision of services to our live underwriting partners.

"R&Q Managing Agency is a well-developed and scalable platform and we are confident it will prosper under the stewardship of Coverys. We have enjoyed working with Coverys for several months to assist in the further development of their business in the London market. There is a good cultural 'fit' between the two organisations and we look forward to continuing the relationship in respect of Syndicate 3330 and exploring opportunities to work together in the future."

Shore Capital said: "We view this deal as an excellent outcome for shareholders in terms of the price obtained, the delivery against the group's simplification plans and the potential to recycle the disposal proceeds into value accretive transactions. The group's reference to its growth potential for 2017 and beyond is very encouraging, both in terms of NAV accretion and distribution policy."