Shares of R&Q Insurance Holdings tumbled 45% after the company said that it would report a significant pretax loss for the year, according to a MarketWatch report.
Shares at 7:45am GMT were at three pence, a drop of 2.49 pence. R&Q shares are down 95% over the past 12 months, MarketWatch reported.
R&Q said Friday that the loss was driven by rising costs and a shortfall in reserves at its legacy insurance business.
The insurer said in a news release that it expects reserves from its legacy insurance business for 2023 to tumble by 23%.
“This primarily relates to tail claim development as well as inflation and abuse claim development across the portfolio,” R&G said.
R&Q said its reserves at year-end 2023 were around $1 billion. However, it said the sale of its Sag Main corporate liabilities joint venture will reduce that to around $670 million.
R&Q said it would sell its 49% interest in the joint venture to Obra Capital Management fr $27 million in cash and $3 million in Randall & Quilter PR preference shares currently held by Obra.
“We are pleased with the strong return on our investment in the joint venture, and this agreement is in line with our objective of realising value from within our legacy insurance business,” said Jeff Hayman, R&Q chairman. “Although we believe that the corporate liabilities market continues to represent an attractive long-term opportunity, developing regulations – including potential changes around capital requirements – have reduced the strategic attractiveness of direct equity participation in joint ventures of this type for R&Q.”
R&Q will use some of the money realised from the sale to repay its revolving credit line, MarketWatch reported.
R&Q announced last year that it was selling program management business Accredited to private equity platform Onyx Partners. The European Commission approved the deal last month. R&Q said the sale would allow it to “undertake a material financial de-leveraging” and “return the capital solvency position back to target levels.”
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