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Coverys Will Acquire RQMA, a Lloyd’s Managing Agency, from R&Q

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June 23, 2017

Coverys will acquire Randall & Quilter Managing Agency Ltd. (RQMA), a fully authorized Lloyd's of London turnkey managing agency based in London. RQMA is part of Randall & Quilter Investment Holdings (R&Q), a non-life insurance investor, underwriting manager, captive manager, and service provider.

The sale follows R&Q's previous decision to simplify its operations to focus on core, high-growth activities, which include (i) the acquisition/assumption of run-off portfolios and (ii) the use of its licensed companies in the United States and European Union as conduits for niche and profitable books of property and casualty business, primarily to highly rated reinsurers.

As a turnkey managing agency, RQMA assists new syndicates in launching their underwriting businesses at Lloyd's of London while delivering operating services necessary for the underwriting and maintenance of existing syndicates, including Syndicate 1991 and Syndicate 3330. Through the acquisition, Coverys will acquire RQMA's full staff and business operations, including its turnkey business for new syndicates, and the continued responsibility to support the syndicates under management.
"Coverys seized this opportunity to expand our non-insurance services in addition to leveraging the knowledge and experience of RQMA's leadership team," said Gregg Hanson, CEO and president of Coverys. "This continued exposure and growth of Coverys through RQMA's experience and relationships offers the ability to expand our sophisticated solutions space."

Ken Randall, R&Q chairman and CEO, commented: "The proposed sale of our Lloyd's managing agency is a significant milestone in the R&Q'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 Ltd 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."

On completion, the agreement involves the cash payment by Coverys to R&Q of $22.6 million, which, after costs and related incentive payments, will result in estimated net proceeds to R&Q of £13.9 million.

R&Q will deploy the net proceeds of the sale to help finance the ever-growing legacy transaction pipeline, especially in the United States and Lloyd's, and to generate valuable commission income from the use of Accredited and Malta’s direct licenses.

Syndicate 1991 has a capacity of around £127 million, writing niche small and medium enterprise property and casualty business, mostly through delegated underwriting authorities. Syndicate 1991 has the benefit of a wide range of primarily third-party industry and private capital support.

Syndicate 3330 provides reinsurance to close and other reinsurance solutions for legacy business within Lloyd's. Syndicate 3330's capital support is provided entirely by R&Q. After the sale of RQMA, R&Q intends to continue to support and grow this legacy-focused syndicate through a proposed separate management agreement with the new Coverys-owned agency.

RQMA also provides back office support to Syndicate 2088, the syndicate managed by XL Catlin and backed by China Re.

The acquisition is subject to regulatory change-of-control approval by Lloyd's and the Prudential Regulation Authority, anticipated to be received in late 2017.

For more on R&Q, view the articles "R&Q Completes Loss Portfolio Transfers with American Insurance Groups," "R&Q Acquires Captive Insurer of American Fortune 500 Company," "R&Q Acquires Bermuda Captive Linco," "R&Q Captive Management Completes Novation from Arizona Captive PacWest," "R&Q Captive Management Acquires Clariant Insurance," and "Randall & Quilter Releases Full-Year Financials for 2016."

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