AM Best has affirmed the Financial Strength Ratings of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of a- of Accredited Surety and Casualty Company, Inc. (ASCC) (Orlando, FL) and Accredited Insurance (Europe) Limited (formerly R&Q Insurance (Malta) Limited) (AIEL) (Malta). Concurrently, AM Best has affirmed the Long-Term ICR of bbb- of Randall & Quilter Investment Holdings Ltd. (R&Q) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.
The ratings of ASCC and AIEL reflect the consolidated balance sheet strength of R&Q (AIM:RQIH), which AM Best categorises as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The rating of R&Q, as a non-operating insurance holding company, is determined by reference to the credit assessment of R&Q on a consolidated basis, and the normal subordination of holding company creditors to operating company policyholders.
As wholly owned entities of R&Q, ASCC and AIEL are strategically important to and integrated within the Randall & Quilter group (collectively referred to as the group). They are pivotal to the groups growing program business, providing insurance services to managing general agents, and hold essential licences for legacy business in the United States and Europe.
The groups balance sheet strength is underpinned by its risk-adjusted capitalisation being at the strongest level, as measured by Bests Capital Adequacy Ratio (BCAR). Offsetting rating factors include AM Bests expectation of increased pricing and reserving risk with business growth, moderate financial leverage and increasing dependence on reinsurance as program business grows. Operating performance remains adequate, with a track record of profitability in recent years and a five-year weighted average return on equity of 5%. RQIHs strong profile in the small and medium-sized run-off market helps generate a flow of new profitable run-off acquisitions.
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The group announced, on 7 February 2019, the issuance of approximately GBP 107 million of shares via the AIM market, to supplement the issuance of USD 70 million senior subordinated debt on 28 December 2018. The new capital is expected to be used to support liquidity in connection with previously announced acquisitions, to support further growth of the program business and to fund the acquisition of a number of identified legacy targets. While risk-adjusted capitalisation will be bolstered over the short-term by this new capital, it is expected to be utilised fully by business growth over the longer term. The share and debt issues have little impact on the groups debt leverage ratio.
This press release relates to Credit Ratings that have been published on AM Bests website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Copyright 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
William Keen-Tomlinson, ACA
Senior Financial Analyst
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