R&Q raises $107.75mn of debt to support program and legacy growth

Randall & Quilter (R&Q) has signed an agreement to issue $107.75mn of 13-year unsecured subordinated Tier 2 notes which will be used to support the ongoing growth of its program management and legacy-focused insurance operations, taking the amount of new capital it has raised this year to north of $200mn.

In a statement, R&Q said the notes, which will be due in December 2033 and can be called after five years at par, have received approval by the Bermuda Monetary Authority for inclusion in Tier 2 Ancillary Capital.

The coupon has been set at a rate of three-month US dollar Libor, subject to a 0.5 percent floor and 2 percent cap, along with a margin of 6.75 percent for the first 10 years and 8.25 percent thereafter.

The notes, R&Q said, will be issued in a private placement.

R&Q’s deputy executive chairman William Spiegel explained that the transaction “will further support our ability to drive growth across our two businesses”.

“The notes represent an advantageous source of capital given the favourable treatment they receive within our regulatory solvency and adjusted financial leverage positions,” said Spiegel.

The debt raise comes after R&Q earlier this year undertook a $100mn equity raise that was backed by existing shareholder 777 Partners and Hudson Structured Capital Management, the Bermuda ILS fund manager led by former Goldman Sachs executive Mike Millette.

“This placement, as well as our $100mn equity raise in May, means we will have accessed over $200mn of capital across diversified sources of funding during the course of this year,” added Spiegel.

“Our balance sheet strength positions us to continue to take advantage of the ‘hardening’ insurance environment and increasing demand we are experiencing for our legacy insurance and program management solutions.”

The news comes as R&Q’s share price moves closer to reaching its highest point in the past year. The London-listed stock reached 187.00 pence per share at the close of 9 November, and has ended each day’s trading since at north of 180.00 pence.

R&Q’s share price closed on Thursday at 186.00 pence per share, up 0.50 pence compared with Wednesday’s close.