Randall & Quilter to acquire Royal London General Insurance

Randall & Quilter (R&Q), a Bermudan insurance group, has announced that it has agreed to acquire the British non-life insurance company Royal London General Insurance (RLGI) that was in run-off.

The agreed purchase price was £11.9m, which includes a small discount to the value of RLGI’s net assets of £13.5m at the end of 2015. The transaction will be financed from the company’s bank facility and cash at hand, according to management.

RLGI, which was 'open' in the years 1985 to 1999 with just employers' liability for Small medium enterprises (SMEs) the residual liabilities in the run-off, reported a full-year 2015 profit before tax of £0.8m.

The company plans to transfer the business to R&Q insurance by the end of 2017 once regulatory approval has been given for the acquisition.

Chairman and Chief executive of R&Q said: "We are delighted to have reached agreement to acquire RLGI and this continues to demonstrate the ability of R&Q to provide exit solutions to owners of insurance companies in run-off. This will be the second transaction where R&Q has provided non-life legacy solutions to the life and pensions sector. We remain excited about our legacy acquisition pipeline."

According to analyst Eamonn Flanagan at house broker Shore Capital, “this deal is R&Q's fifth in 2016 to date and is the second involving a UK life and pensions company. It highlights the strength of R&Q's offering to different types of vendors and the growing impact of Solvency II on the considerations of potential vendors” said Flanagan.

"We again highlight the considerable income attractions offered by the stock, with a roughly 7.7% forward dividend yield, which we view as secure."

The firm’s share price fell 0.46% to 109p at 0927 BST on Friday.