A.M. Best Affirms Randall & Quilter Ratings

February 17, 2017

A.M. Best has affirmed the Long-Term Issuer Credit Rating of “bbb-” of Randall & Quilter Investment Holdings Ltd. [R&Q] [Bermuda]. The outlook of this Credit Rating [rating] remains stable.

A statement from the ratings agency said, “The rating reflects R&Q’s solid risk-adjusted capitalisation, strong profile within the run-off market, a recovering operational performance supported by a good pipeline of run-off acquisition targets in an active market, and the improving performance of the group’s services businesses. The company is likely to further improve performance in 2017.

“R&Q owns, through its subsidiaries, non-life insurance portfolios in runoff, service companies active in insurance and insurance ‘live’ entities that are open to new insurance business. Live entities include Accredited Surety and Casualty Company, Inc. and a participation in Lloyd’s Syndicate 1991.

“R&Q’s financial strength is enhanced by the limited nature of any further exposure to loss of value in its subsidiary, R&Q Reinsurance Company [R&Q Re], which holds assets and liabilities arising from the acquisition of Brandywine Holdings Corporation and associated companies [Brandywine]. R&Q acquired Brandywine in 2006 from Chubb Limited. A.M. Best has assumed, in affirming the rating, that R&Q will provide no further support beyond the existing net assets of R&Q Re’s and R&Q’s [limited] liability through intra-group reinsurance.

“R&Q’s strong profile in the run-off market helps generate a flow of profitable run-off acquisitions. It is important that this flow is maintained, as the profit arising from these acquisitions is essential to funding the group’s expense levels and supporting its financial performance. R&Q has built service companies around its core run-off expertise, which benefit from revenue arising from group-owned run-off assets. A.M. Best expects the profitability of these activities to improve as they continue to gain third-party revenue and reach the scale required for a more attractive financial performance.

“An offsetting factor is the high proportion of earnings R&Q returns to investors through dividends and share buybacks, which has made it more difficult for R&Q to build its risk-adjusted capitalisation.”

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