R&Q Insurance Regulatory News (RQIH)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

LEI: 213800G4W18GWKTR9X51

25 May 2022

Result of Special General Meeting

Proposed $100 million Placing and Open Offer of up to $8 million

Further to the announcement at 8.04 a.m. this morning, Randall & Quilter Investment Holdings Ltd. (AIM:RQIH) (the "Company", and together with its subsidiary undertakings "R&Q"), the leading non-life global specialty insurance company, today held the reconvened Special General Meeting ("SGM") referred to in the notice to shareholders of the Company dated 27 April 2022 and which had been adjourned on 20 May 2022.

Following a poll conducted at the meeting, resolutions 1, 2 and 3 as set out in the notice convening the SGM have not been approved by shareholders. The results of all resolutions put to the SGM are in the appendix below.

The passing of resolutions 1, 2 and 3 was a condition to completion of the cash acquisition of the entire issued share capital of the Company by Brickell PC Insurance Holdings LLC ("Brickell") and Brickell's commitment to provide $100 million new equity funding to the Company (the "Transaction").

As the Transaction will not proceed, the Company is now focussed on raising approximately $100 million via a Placing and up to $8 million via an Open Offer (the "Fundraise").

The vote against the resolutions required to complete the Transaction demonstrates the confidence of certain of the Company's shareholders in the future value and prospects of the business and support for an equity raise. Following a short market sounding process, certain existing shareholders have indicated strong interest to subscribe for in excess of $100 million in the Fundraise.

William Spiegel, Executive Chairman of R&Q, said:

"Following the outcome of today's vote, we will turn our focus to the fundraise. Having prepared for this as an option when we originally engaged with shareholders, we are well placed to launch this shortly. Throughout this process our priority has always been delivering the best outcome for shareholders and the outcome of the vote has demonstrated the long-term value that investors see in the business. We continue to have great confidence in the future prospects for R&Q, and expect in excess of $90 million in pre-tax operating profit in 2024. We look forward to engaging with our shareholders on the fundraise."

Alastair Campbell, Non-Executive Director and Senior Independent Director of R&Q, commenting on behalf of the Board said:

"Following further engagement with our shareholders our priority now is to secure the funding needed to de-lever our balance sheet and improve our financial profile. Since becoming Executive Chairman just over twelve months ago, William, alongside his new management team, have outlined a compelling new strategy and driven significant positive change at R&Q, enhancing its culture, risk management and governance. We look forward to engaging with our shareholders as we proceed with the fundraise."

Trading Update and Outlook

R&Q anticipates achieving in excess of $90 million pre-tax operating profit in 2024. This is due to significant operating leverage as the business achieves scale, which R&Q believes is underpinned by the ongoing growth in its Program Management business and the ability to deploy Gibson Re's capital to support its Legacy Insurance business.

The Company continues its transformational journey to becoming primarily a recurring fee-based business by 2024. Gibson Re has capacity to assume $1.6 billion of reserves over a three-year underwriting period, of which just over $400 million was assumed at year-end 2021. The timing of legacy transactions continues to be episodic with a heavy weighting towards Q4. To date, a small number of legacy transactions have completed and we have a strong pipeline of activity similar to last year, and expect to realise an annual recurring fee income of 4.25% of reserves which are under management. As the business transitions to a recurring fee generating business, the timing of legacy transactions will impact short term profitability. However, the focus of management is on the deployment of Gibson Re's capital and growth in reserves under management that will generate significant recurring fee income in the future.

Program Management continues to grow and R&Q expects to achieve $1.75 billion of gross written premium in 2022. Program Management earns fee income of approximately 5% of the written premium ceded to reinsurers. Program Management also includes R&Q's 40% share in the profits of Tradesman Program Managers.

Approach to Fundraise

The Fundraise is expected to comprise a non-underwritten firm and conditional non pre-emptive placing of shares to institutional shareholders (the "Placing") and an open offer to existing qualifying shareholders (the "Open Offer").

The Placing is expected to be launched on or around 13 June 2022 following the release of R&Q's results for the year ended 31 December 2021. The Company is expecting to offer a maximum of 10% of its issued share capital on a firm basis (the "Firm Placing") with additional ordinary shares being offered conditional upon shareholder approval at a special general meeting of the Company expected to take place on or around 11 July 2022 (the "Conditional Placing"). Ordinary shares placed with investors in the Firm Placing and the Conditional Placing are expected to be issued and admitted to trading on AIM on or around 15 June 2022 and 12 July 2022, respectively.

In addition, in order to provide a wider group of shareholders with the opportunity to participate in the Fundraise, qualifying shareholders are expected to be provided with the opportunity to subscribe for ordinary shares in the Open Offer at the same offer price as the Placing for up to an aggregate value of $8 million (and no more than €8m1). The Open Offer is expected to be launched on or around 15 June 2022, with the results being published on or around 8 July 2022 and the ordinary shares taken up in the Open Offer being issued and admitted to trading on AIM on or around 12 July 2022. 

1 Under the Prospectus Regulation Rules, the UK threshold below which public offers are exempt

Use of Proceeds

$60 million will be used to fund collateral requirements and the balance to pay down debt.

R&Q had received pre-emptive waivers from its bank lenders on its existing financial covenants until the earlier of completion of an equity raise or 29 June 2022. R&Q is in discussions with its lending banks to extend the waivers.

Further announcements will be made in due course.

Expected Timetable of Events2

2 Dates are anticipated dates that are subject to change. Confirmation of the timetable will be given in due course.

APPENDIX

Result of SGM

IMPORTANT NOTICES

THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED IN IT, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE, TRANSMISSION, FORWARDING OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA (COLLECTIVELY, THE "UNITED STATES"), AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL. FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION.

This Announcement or any part of it does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States, Canada, Australia, Japan or South Africa or any other jurisdiction in which the same would be unlawful. No public offering of shares is being made in any such jurisdiction.

No action has been taken by the Company, Barclays Bank PLC ("Barclays"), Numis Securities Limited ("Numis" and, together with Barclays, the "Joint Brokers") or any of their respective affiliates, or any person acting on its or their behalf that would permit an offer of shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and the Joint Brokers to inform themselves about, and to observe, such restrictions.

The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), or with any securities regulatory authority of any State or other jurisdiction of the United States, and may not be offered, sold or transferred, directly or indirectly, in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities laws of any State or any other jurisdiction of the United States.

Certain statements contained in this Announcement constitute "forward-looking statements" with respect to the financial condition, results of operations and businesses and plans of the Company and its subsidiaries (the "Group"). Words such as "believes", "anticipates", "estimates", "expects", "intends", "plans", "aims", "potential", "will", "would", "could", "considered", "likely", "estimate" and variations of these words and similar future or conditional expressions, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon future circumstances that have not occurred. There is a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. As a result, the Group's actual financial condition, results of operations and business and plans may differ materially from the plans, goals and expectations expressed or implied by these forward-looking statements. No representation or warranty is made as to the achievement or reasonableness of, and no reliance should be placed on, such forward-looking statements. The forward-looking statements contained in this Announcement speak only as of the date of this Announcement. The Company, its directors, the Joint Brokers, their respective affiliates and any person acting on its or their behalf each expressly disclaim any obligation or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law or regulation the London Stock Exchange.

Barclays Bank PLC is authorised by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the PRA and the Financial Conduct Authority (the "FCA"). Numis Securities Limited is authorised and regulated in the United Kingdom by the FCA. Each of Barclays and Numis is acting exclusively for the Company and no one else in connection with the content of this Announcement or any matters described in this Announcement. Neither Joint Broker will regard any other person as its client in relation to the content of this Announcement or any matters described in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice to any other person in relation to the content of this Announcement or any matters referred to in this Announcement.

This Announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by either Joint Broker or by any of its affiliates or any person acting on its or their behalf as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

This Announcement does not constitute a recommendation concerning any investor's investment decision with respect to the possible Fundraise. Any indication in this Announcement of the price at which ordinary shares have been bought or sold in the past cannot be relied upon as a guide to future performance. The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance. This Announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the Company's shares. The contents of this Announcement are not to be construed as legal, business, financial or tax advice. Each investor or prospective investor should consult their or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

No statement in this Announcement is intended to be a profit forecast or profit estimate for any period, and no statement in this Announcement should be interpreted to mean that earnings, earnings per share or income, cash flow from operations or free cash flow for the Company for the current or future financial years would necessarily match or exceed the historical published earnings, earnings per share or income, cash flow from operations or free cash flow for the Company.

All offers of the shares pursuant to the possible Fundraise will be made pursuant to an exemption under Regulation (EU) No 2017/1129 (as amended) (the "EU Prospectus Regulation") or the EU Prospectus Regulation as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 from the requirement to produce a prospectus. This Announcement is being distributed and communicated to persons in the UK only in circumstances to which section 21(1) of the Financial Services and Markets Act, 2000, as amended does not apply.

Any communication that indications of interest exceed the offer size does not amount to an assurance that the Fundraise (or any part of it) is underwritten, nor is the Fundraise subject to any binding commitment from investors, nor an assurance that any transaction will take place at all or on the terms indicated herein.

Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into or forms part of this Announcement.

This Announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside the United Kingdom.