REG - R&Q Insurance Hldgs - Posting of Circular

R&Q Insurance HoldingsAnnouncement

14/12/2023 07:15

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RNS Number : 7201W  R&Q Insurance Holdings Ltd  14 December 2023

R&Q Insurance Holdings Ltd

("R&Q" or the "Company")

Posting of Circular

14 December 2023

Further to R&Q's announcement on 20 October 2023 regarding the proposed
Sale of Accredited to Onex Corporation, R&Q announces that it has
published a shareholder circular (the "Circular") and notice of special
general meeting for the purpose of proposing the vote in relation to the
resolution to approve the Sale. Extracts from the Circular are set out below.
The Circular will be posted on the Company's website and to shareholders
today. Capitalised terms used in this announcement have the meanings given to
them in Appendix 4 to this announcement.

1.   Introduction

On 4 April 2023, R&Q announced that it was undertaking a strategic
initiative to separate its legacy insurance business, R&Q Legacy, from its
program management business, Accredited. On 20 October 2023 R&Q announced
that it had entered into a conditional agreement with funds advised by Onex
Corporation to sell 100 per cent. of the equity interest in Randall &
Quilter America Holdings Inc., the holding company of Accredited, for a
purchase price of $465 million which represents an expected equity value of
approximately $438 million, when adjusted for Accredited's existing debt
commitments.

The Sale will result in a fundamental change of business of the Company for
the purposes of Rule 15 of the AIM Rules for Companies and is therefore
conditional upon, among other things, the approval of the R&Q
Shareholders. That approval will be sought at a Special General Meeting of the
Company to be held at 71 Fenchurch Street, Ground Floor, London EC3M 4BS at
2.30 p.m. on 11 January 2024. The notice convening the Special General Meeting
will be set out in the Circular.

The purpose of the Circular is to explain the background to and reasons for
the proposed Sale, including the future strategy for R&Q Legacy, and to
explain why the Non-Executive Directors consider the Sale to be in the best
interests of R&Q, the R&Q Shareholders as a whole and R&Q's other
stakeholders and unanimously recommend that R&Q Shareholders vote in
favour of the Resolution set out in the Notice of General Meeting. Your
attention is drawn, in particular, to Appendix 3 of this Announcement which
summarises certain risks to R&Q including risks relating to the Sale,
risks should the Sale not proceed and risks relating to R&Q Legacy.

2.   Background to and strategic rationale for the Sale

R&Q is a global non-life speciality insurance company currently organised
around two principal businesses: a legacy insurance business (R&Q Legacy)
and a program management business (Accredited).

R&Q has supported the growth and strategic development of Accredited since
its launch in 2017. Accredited relies on an 'A-' financial strength rating
from AM Best to conduct business. Accredited has historically relied on the
financial strength of the broader R&Q Group to obtain its financial
strength rating. Following a review in Q1 2023, the Board considered
Accredited's increased size and scale and concluded that it was in the best
interests of the R&Q Shareholders for Accredited to obtain a standalone
financial strength rating without influence from the broader R&Q Group. In
the event that Accredited does not retain a fully independent financial
strength rating, the Board believes there is a significant risk that AM Best
will downgrade Accredited which would have a detrimental impact on
Accredited's ability to successfully operate its business, particularly in the
United States where an 'A-' financial strength rating is a minimum requirement
from Accredited's counterparties. AM Best recommended that in order for
Accredited to obtain a fully independent rating, it was essential for there to
be a legal separation of Accredited and R&Q Legacy subsidiaries followed
by a sale of at least 51 per cent. of R&Q's equity interests in Accredited
to a third party.

In response to the guidance from AM Best, on 4 April 2023 the Board announced
its intention to implement a reorganisation to separate the subsidiaries that
operate R&Q Legacy from the subsidiaries that operate Accredited. In
addition, the Board announced that it had decided to explore a full
deconsolidation of Accredited and subsequently ran an extensive sale process
to find a suitable partner for Accredited's clients and colleagues and to
realise full value for R&Q and the R&Q Shareholders.

A strategic transaction committee comprised of just the Non-Executive
Directors was formed to provide governance oversight of the Sale. To be clear,
no executive directors were part of this committee.

The sale process commenced in April 2023 with an extensive global outreach to
potentially interested parties, representing a broad range of financial and
strategic buyers. The Sale is the outcome of this process. For more details of
the sale process please see Appendix 2 to this Announcement.

Alongside the sale process, the legal reorganisation was completed in June
2023. On completion of the legal reorganisation, AM Best recognised Accredited
as having an independent rating unit with a financial strength rating of 'A-'.
After June 2023, the rating remained "Under Review With Negative Implications"
subject to the sale and deconsolidation of Accredited until after the Sale was
announced. On 24 October 2023, AM Best revised Accredited's ratings outlook to
"Under Review - Developing" in anticipation of the Sale which is considered a
positive development.

The Non-Executive Directors consider the Sale to be in the best interests of
the R&Q Shareholders and that it enables R&Q to realise value for
Accredited. The Sale will facilitate a material financial de-leveraging of
R&Q and will create a simpler and better capitalised R&Q Legacy
business. Following the Sale, R&Q will be positioned to deliver value to
R&Q Shareholders by continuing to execute its existing strategy of
transitioning R&Q Legacy to a capital efficient and stable recurring
fee-based business model.

3.   Future strategy of R&Q

The Sale refocuses R&Q as a legacy insurance business in Bermuda, Europe,
the US and the UK. After the Sale, R&Q will have a legacy platform with
over 100 people across M&A/reinsurance solutions, claims management,
servicing, actuarial and finance functions. In addition, it will have Reserves
Under Management of over $1.0 billion and a strong transaction pipeline.
R&Q Legacy is positioned to continue to be an important player in the
legacy market.

The Sale will enable the Board to undertake a material financial de-leveraging
of R&Q which will enhance the business' ability to execute the Board's
existing strategy of transitioning R&Q Legacy to a capital efficient and
stable recurring fee-based business model. Gibson Re, R&Q's dedicated
sidecar will continue to be a core component of this transition. R&Q
retains 20 per cent. of a typical legacy transaction with the remaining 80 per
cent. ceded to Gibson Re. Gibson Re will underpin R&Q's ability to deploy
capital and offer innovative legacy solutions to its clients.

The non-life legacy market is significant and growing, with total global
reserves estimated at $960 billion in 2022, an increase of $96 billion from
the previous year(1). R&Q has a strong pipeline, with identified
transactions comprising over $850 million of reserves, including three deals
in advanced stages with in aggregate over $100 million of reserves. Going
forward, R&Q will continue to focus on transactions in the small to medium
size range, where competition is less intense, and to offer compelling
finality solutions for corporates in the US, UK and Europe. This follows
R&Q's landmark deal earlier in 2023 to invest alongside Obra Capital, Inc.
to acquire and professionally manage the non-insurance legacy liabilities of
MSA Safety Inc. This strategy, alongside Gibson Re, will generate fees from
two distinct but complementary pools of liabilities: traditional insurance
reserves and corporate non-insurance liabilities.

From a financial perspective, immediately following the Sale, R&Q expects
to experience run-rate operating losses as it continues to execute on its
transition of R&Q Legacy to a capital efficient and stable recurring
fee-based business model. It is for this reason that R&Q will retain an
estimated $50 million of cash from the Estimated Net Cash Proceeds for the
purpose of working capital. As part of this strategy, the Board is focused on
making R&Q Legacy a more efficient and scalable business. R&Q has
already identified and taken action on a number of opportunities to reduce
expenses, including simplifying its legal entity structure and rationalising
its real estate footprint. Work is also underway to automate the input of data
received from third party administrators ("TPAs") and move internal systems to
the Cloud. Better use of data is enabling R&Q to make smarter decisions,
more quickly, while more automated processing is reducing duplication and
costs. The decrease in R&Q's Fixed Operating Expenses to $36 million for
the six months to June 2023 compared to $39 million for the six months to June
2022 is evidence of the results and success this strategy is already
delivering. The Board expects this will create further operational leverage as
R&Q Legacy grows Reserves Under Management. The Board is confident that
R&Q Legacy has a team with the right experience to deliver this strategy,
and that it represents the best way to deliver value to shareholders.

In parallel to executing its organic growth plan, the Board will continue to
explore potential transactions to de-risk and reduce volatility in R&Q's
balance sheet or otherwise maximise value to stakeholders.

A more detailed summary of the future strategy of R&Q Legacy is set out in
Appendix 2 to this Announcement.

4.   Board recommendation

The Non-Executive Directors unanimously support the Sale and believe the terms
of the Sale are in the best interests of R&Q, the R&Q Shareholders and
R&Q's other stakeholders. Specifically, the Non-Executive Directors
believe the Sale represents the only executable alternative available to
R&Q today and, in the opinion of the Non-Executive Directors, the best
opportunity for R&Q Shareholders to realise the highest potential value.
Further, the Non-Executive Directors believe the Sale provides the most
certainty for Accredited to maintain an independent financial strength rating
of 'A-', which is essential to protect its value.

The Non-Executive Directors believe that the Sale refocuses R&Q as a
legacy insurance business, with a platform of over 100 people and Reserves
Under Management of over $1.0 billion. In addition, the Sale will enable the
Board to undertake a material financial de-leveraging which will enhance the
retained business' ability to execute the Board's existing strategy of
transitioning R&Q Legacy to a capital efficient and stable recurring
fee-based business model.

R&Q Shareholders should note that if the Resolution is not approved by
R&Q Shareholders at the Special General Meeting, the Sale will not
proceed. The Non-Executive Directors believe that the Sale represents
R&Q's best opportunity to achieve a full separation and deconsolidation of
Accredited from the Group and, as noted above, such full separation is
necessary to enable Accredited to retain a fully independent financial
strength rating. In the event that Accredited does not retain a fully
independent financial strength rating, the Board believes there is a
significant risk that AM Best will downgrade Accredited which would have a
detrimental impact on Accredited's ability to successfully operate its
business, particularly in the United States where an 'A-' financial strength
rating is a minimum requirement from Accredited's counterparties. Such a
downgrade would therefore have material implications on R&Q's ability to
continue as a going concern should the Sale not proceed to Closing and
Accredited remain part of the Group.

Additionally, the Board believes that the current financial leverage of
R&Q is unsustainable and if the Sale were not to proceed and the Available
Net Cash Proceeds were not available to facilitate a material financial
de-leveraging of R&Q, R&Q may not be able to repay its debt facilities
as they become due and R&Q would therefore be unable to continue as a
going concern.

R&Q remains in close dialogue with its lending banks, providers of credit
and other financing providers. R&Q will require support from these parties
in relation to drawdowns under the existing Main Banking Facility, ongoing
renewals or redemptions, ongoing requests for waivers for potential covenant
breaches and for the necessary consents, approvals, agreements, waivers and
releases required to enable the Sale to take place, as described in paragraph
7. A potential default or cross-default by R&Q on its existing debt
facilities may lead its lenders to take action to protect their interests by
requiring collateral or enforcing their security over certain R&Q assets,
resulting in a materially worse outcome for R&Q and all its stakeholders,
including its shareholders.

The attention of R&Q Shareholders is drawn to Appendix 4 to this
Announcement for a summary of the risk factors.

The Non-Executive Directors consider that the Sale is in the best interests of
R&Q and the R&Q Shareholders as a whole. Accordingly, the
Non-Executive Directors unanimously recommend that you vote in favour of the
Resolution to be proposed at the Special General Meeting.

The Non-Executive Directors have irrevocably committed to vote in favour of
the Resolution in respect of their aggregate shareholdings of 240,476 R&Q
Shares representing approximately 0.06 per cent. of the R&Q Shares in
issue at the date of this Announcement.

The Executive Directors and members of R&Q's senior management team have
irrevocably committed to vote in favour of the Resolution in respect of their
aggregate shareholdings of 7,600,996 R&Q Shares representing approximately
2.04 per cent. of the R&Q Shares in issue at the date of this
Announcement.

In addition, Scopia Capital Management have irrevocably committed to vote in
favour of the Resolution in respect of their aggregate shareholdings of
34,706,128 R&Q Shares representing approximately 9.29 per cent. of the
R&Q Shares in issue at the date of this Announcement.

In aggregate, irrevocable undertakings have been given to vote, or procure
votes, in favour of the Resolution representing, as at the Latest Practicable
Date, 42,547,600 R&Q Shares and constituting approximately 11.39 per cent.
of R&Q's issued voting share capital.

Please see paragraph 9 for further details of the irrevocable undertakings.

5.         Trading Update

By way of an update on trading since the Company's interim results were
released:

i)   R&Q Legacy continues to enjoy a robust pipeline of opportunities
with more than $1 billion of (re)insurance reserves and over $400 million in
potential corporate liabilities;

ii)   R&Q Legacy also has three transactions currently at an advanced
state, either signed or agreed, subject to regulatory approval; and

iii)  Accredited's growth continues with c.$1.6 billion in gross premiums
written year to date as of the end of Q3 of 2023.

The Group's latest solvency as of 30 September 2023 is approximately 150 per
cent., in line with the Company's risk appetite.

6.         Summary terms of the Sale

The purchase price for Accredited pursuant to the terms of the Purchase and
Sale Agreement is $465 million subject to certain adjustments. The Expected
Net Cash Proceeds from the Sale are approximately $300 million after adjusting
for, among other things:

i)   Accredited's existing debt commitments;

ii)   a number of Purchaser conditions to the Sale, including:

a.     the repayment of an existing $46 million intercompany loan by
Accredited to R&Q plus any unpaid interest;

b.    an estimated $76 million equity capital contribution by R&Q into
Accredited so Accredited can satisfy a minimum AM Best capital adequacy ratio
of 44 per cent. at Closing; and

c.     costs incurred in connection with the transactions contemplated by
the Purchase and Sale Agreement.

The transaction documentation includes both customary and business-specific
representations, warranties and certain special indemnities. The Sale is
conditional upon the satisfaction (or waiver, if applicable) of certain
conditions, including the consent of the R&Q Shareholders and the R&Q
financing providers as detailed in paragraph 7 below. A more detailed summary
of the terms of the Sale of Accredited is set out in Appendix 2 to this
Announcement and a more detailed summary of the terms of the Purchase and Sale
Agreement is set out in Part VI of the Circular.

7.         Approvals required for the Sale

The Sale constitutes a fundamental change of business pursuant to Rule 15 of
the AIM Rules for Companies. The Closing of the Sale is therefore conditional
on the approval of the Resolution by a majority of R&Q Shareholders at a
Special General Meeting. The Special General Meeting of the R&Q
Shareholders is to be held at 71 Fenchurch Street, Ground Floor, London EC3M
4BS at 2.30 p.m. on 11 January 2024. The notice convening the Special General
Meeting is set out in the Circular.

Under the Purchase and Sale Agreement the consent of certain insurance
regulatory and antitrust bodies are required. Further details are set out in
the Circular.

The Sale also requires various consents, approvals, agreements, waivers and
releases from a number of R&Q financing providers.

The R&Q Group has the following financing arrangements in place:

1.    £125 million Syndicated term loan and revolving credit facilities.
The Company is the Borrower and the banks have a wide package of guarantees
and security (the "Main Banking Facility")

2.    $120 million Syndicated unsecured letter of credit facility with a
parental guarantee by the Company. The purpose of this facility is to provide
FAL for Syndicates 1110 and 5678 (the "FALLOC")

3.    AUD$55 million unsecured letter of credit facility with a parental
guarantee by the Company (the "Cayman LC Facility")

4.    $15 million unsecured letter of credit facility with a parental
guarantee by the Company (the "Bermuda LC Facility")

5.    $20 million unsecured letter of credit facility ("SAFER LC")

6.    $70 million senior unsecured floating rate notes due 2028, listed on
Euronext Dublin (the "Senior Notes"). The Company is the Issuer and the notes
are guaranteed by Randall & Quilter America Holdings, Inc. ("RQAH"), which
is the intermediate holding company of Accredited. These constitute Tier 3
regulatory capital of the Company.

7.    $125 million subordinated notes due 2033, also listed on Euronext
Dublin (the "Subordinated Notes"). The Company is the Issuer. These constitute
Tier 2 regulatory capital of the Company.

8.    €5 million floating rate subordinated notes due 5 July 2027 and
€20 million floating rate subordinated notes due 5 October 2025, in each
case issued by Accredited Insurance (Europe) Limited (previously known as
R&Q Insurance (Malta) Limited). These constitute regulatory capital. These
notes are being assumed by Onex Raven Buyer Inc. in its acquisition of
Accredited and will no longer be a debt obligation of R&Q after Closing of
the Sale

9.    $20 million floating rate subordinated notes due 22 December 2023
(the "Bermuda Subordinated Notes"), issued by R&Q Re Bermuda Limited.
These constitute Tier 2 regulatory capital of R&Q Re Bermuda Limited and
so any repayment (whether on maturity or otherwise) is dependent on compliance
with certain Bermuda insurance, legal and regulatory requirements at the time.
As part of the Company's discussions with its financing providers, it is
seeking to achieve a solution for the Bermuda Subordinated Notes.

In terms of specific consents and releases required:

i)       under the Main Banking Facility:

a.     the Company has pledged the entire issued share capital of RQAH in
favour of NatWest as security;

b.    RQAH has guaranteed the Main Banking Facility in full;

c.     RQAH has pledged its assets in favour of NatWest; and

d.    RQAH has pledged the entire issued share capital of Accredited
International Insurance Group, Inc. in favour of NatWest,

and the guarantee and security listed above will need to be released ahead of
Closing of the Sale;

ii)      RQAH has guaranteed the Senior Notes in full and this guarantee
will need to be released ahead of Closing of the Sale; and

iii)     if the Company disposes of either Accredited Insurance (Europe)
Limited or Accredited Surety & Casualty Inc. Florida (both of which sit
within the Accredited group) without the prior written consent of the majority
of the holders of the Senior Notes, a put event is triggered which would
provide the holders of the Senior Notes with a right to request redemption of
the Senior Notes. As such, written consent of the holders of the Senior Notes
will be required ahead of Closing the Sale.

In addition to the consents and releases noted above, R&Q will also
require from its financing providers:

i)       extensions to waivers for potential covenant breaches, which
have currently been obtained until 15 December 2023. It is the Board's
expectation that it will need to obtain further extensions to the waivers
until negotiations with R&Q's financing providers have been completed;

ii)      variations to certain terms including in relation to business
transfers and the distribution of proceeds from the Sale and to reflect the
alteration to the profile of the R&Q Group as a result of the Sale; and

iii)     deferrals of payment obligations both prior to and around the
Sale.

Unless all of the above consents, approvals, agreements, waivers and releases
are forthcoming, the condition relating to the approval of R&Q's lenders
to the Sale will not be met. In such circumstances, the Purchase and Sale
Agreement may be terminated and, in which case, Closing of the Sale would not
take place.

8.   Changes to the Board and management

It is expected, in connection with the Sale, that R&Q's Chief Executive
Officer, William Spiegel, and Chief Financial Officer, Thomas Solomon, will
become employees of Accredited. The Non-Executive Directors considered the
continuation of William and Thomas as Chief Executive Officer and Chief
Financial Officer of Accredited to be key to enable R&Q to secure an offer
for the sale of Accredited that maximised value for the R&Q Shareholders.
Of the 4 non-binding offers received at the end of the second round, 3
required William Spiegel and Thomas Solomon to transfer from R&Q to
Accredited. The remaining non-binding offer did not proceed to detailed
discussions relating to the continuation of management. William's and Thomas'
employment and appointments as Chief Executive Officer, Chief Financial
Officer and as Executive Directors of R&Q and its retained Subsidiaries
will therefore cease on Closing of the Sale. William and Thomas will retain
their current positions until Closing of the Sale and are working with the
Board to ensure the successful closing of the Sale and will assist with an
orderly transition post Closing. Please see Appendix 2 to this Announcement
for more information on the plan for the future of R&Q Legacy.

Upon closing of the Sale, Group Non-Executive Chairman Jeff Hayman will act as
Chairman and Interim Chief Executive Officer of R&Q. Jeff joined R&Q
in 2023 as Non-Executive Chairman with over 40 years of experience in the
global insurance industry. Jeff previously served for 5 years as a board
member and chairman of the Risk and Investment Committee at Zurich Insurance
Group (SIX:ZURN). Prior to Zurich, Jeff held multiple senior roles at AIG over
15 years, including global division and regional CEO positions, and also spent
15 years with Travelers Insurance. Jeff's extensive industry experience makes
him well placed to lead R&Q as Interim Chief Executive Officer. The Board
will initiate a search to appoint a new Chief Executive Officer of R&Q at
the appropriate time.

Mr Hayman has agreed, subject to contract, to enter into a service agreement
with the Company pursuant to which he will be employed as Interim Chief
Executive Officer of R&Q Legacy for a fixed basic annual salary of
US$600,000 payable monthly in arrears. There is no entitlement to a bonus. Mr
Hayman will be subject to customary restrictive covenants during and after the
term of the agreement. Mr Hayman's appointment will be finalised upon Closing
of the Accredited sale and the remaining terms and conditions will be agreed
prior to then.

In addition, Paul Bradbrook, currently Chief Accounting Officer for the
R&Q Group, will become Chief Financial Officer of R&Q and will be
appointed to the Board upon closing of the Sale, subject to customary
approvals. Paul has over 20 years of experience in the global insurance
industry, including the Controller Continental Europe for Marsh McLennan.
Prior to Marsh, Paul served as the Chief Accounting and Reporting Officer at
AXA XL and began his career at XL Capital as a Financial Controller. Paul has
a deep understanding of R&Q through his experience as Chief Accounting
Officer, which makes him well positioned to act as Chief Financial Officer.

Mr Bradbrook is currently engaged as the Chief Accounting Officer for the
R&Q Group pursuant to a service agreement with R&Q Central Services
Limited. Mr Bradbrook receives a fixed basic annual salary of US$360,000
payable monthly in arrears and his service agreement is terminable by either
party on six months' written notice. Mr Bradbrook may be entitled to be paid
bonuses of such amounts (if any) at such times and subject to such conditions
as the Company's remuneration committee may in its absolute discretion decide.
In addition, Mr Bradbrook is guaranteed a bonus payment of $201,600 in April
2024. Mr Bradbrook is subject to customary restrictive covenants during and
after the term of the service agreement. The Company is currently undertaking
a benchmarking exercise to ensure that remuneration and the terms and
conditions of Mr Bradbrook's service contract, are appropriate, taking into
account Mr Bradbrook's experience, for the chief financial officer of an AIM
quoted business. Any changes will be made prior to Closing but to take effect
upon Closing of the Sale. A further announcement will be made in due course.

Andrew Pinkes, Global Legacy Chief Executive Officer, has informed the Board
that he has decided to retire from R&Q by the end of 2023. Andrew came out
of retirement and joined R&Q in 2021 to help drive R&Q's strategic
ambitions and to transition R&Q Legacy to a capital efficient, data-driven
and stable recurring fee-based model. The Board would like to take this
opportunity to thank Andrew for his significant contribution to and thoughtful
leadership of R&Q Legacy. The Board and Andrew have agreed that upon
retirement Andrew will enter into a consultancy arrangement with R&Q and
will become an adviser to R&Q and the leadership team until closing of the
Sale.

As announced on 31 March 2023, Alan Quilter, a founder of R&Q and
currently Group Head of Program Management, will retire from R&Q and the
Board of Directors at the end of the year. The Board and Alan are reviewing
Alan's future consultancy role with R&Q Legacy following Closing of the
Sale.

All of R&Q's other Non-Executive Directors, Philip Barnes, Eamonn
Flanagan, Jo Fox, Jerome Lande and Robert Legget will continue in their
current roles. For more detail on the changes to the directors and management
please see Appendix 2 to this Announcement.

9.   Use of proceeds from the Sale and financial impact on R&Q Legacy

The net cash proceeds available for utilisation immediately on Closing are
expected to be between approximately $170 million and $210 million calculated
as follows.

Expected Net Cash Proceeds ($m)

 Purchase Price                              465
 Assumed debt                                (27)
 Equity value                                438
 Repayment of the AIEL Intercompany Loan(2)  (46)
 Capital contribution to Accredited          (76)
 Transaction costs                           (15)
 Expected Net Cash Proceeds                  300
 Additional R&Q legacy collateral            (40-80)
 Working capital                             (50)
 Available Net Cash Proceeds                 ~170-210

In particular, the above calculation allows for:

i)   an estimated $40 million to $80 million(3) of additional collateral
which R&Q will be required to hold against existing legacy insurance
exposures retained by Accredited, as a condition of the Sale; and

ii)   an estimated $50 million(4) of cash to be retained by R&Q for its
ongoing working capital requirements, which will strengthen the financial
position of the remaining Group.

It is expected that, over the course of the next few years, the estimated $40
million to $80 million of collateral in i) above will be released and become
available to R&Q as the underlying exposures are reduced and eliminated.

Following Closing of the Sale, the Board intends to use all of the Available
Net Cash Proceeds to facilitate a material financial de-leveraging of R&Q
while retaining the working capital indicated above for R&Q's ongoing
commitments.

Adjusted for Closing of the Sale and subsequent de-leveraging of R&Q,
assuming Available Net Cash Proceeds of $170 million (at the lower end of the
expected range), R&Q's illustrative pro-forma financial position as if
Closing had occurred at 30 June 2023 would be as follows:

Assets
$2.0 billion

Debt
$203 million

Shareholders'
Equity
$356 million

Debt to Capital
Ratio
36%

Group Solvency
Ratio
>220%

Net Asset Value Per Common
Share
80 cents

Net Asset Value Per Common Share
(Diluted)(5)
79 cents

10.  Irrevocable Undertakings

The Non-Executive Directors have irrevocably undertaken to vote or procure
votes in favour of the Resolution in respect of their holdings of R&Q
Shares, in aggregate, representing 240,476 R&Q Shares and constituting
approximately 0.06 per cent. of R&Q's issued voting share capital as at
the Latest Practicable Date.

In addition to the irrevocable undertakings from the Non-Executive Directors,
William Spiegel, Thomas Solomon, Alan Quilter and certain other members of
R&Q's management team have given irrevocable undertakings to vote, or
procure votes, in favour of the Resolution. In aggregate, these irrevocable
undertakings represent, as at the Latest Practicable Date, 7,600,996 R&Q
Shares and constitute approximately 2.04 per cent. of R&Q's issued voting
share capital.

In addition, Scopia Capital Management ("Scopia") has given an irrevocable
undertaking to vote, or procure votes, in favour of the Resolution. This
irrevocable undertaking, represents, as at the Latest Practicable Date,
34,706,128 R&Q Shares and constitutes approximately 9.29 per cent. of
R&Q's issued voting share capital.

In aggregate, irrevocable undertakings have been given to vote, or procure
votes, in favour of the Resolution representing, as at the Latest Practicable
Date, 42,547,600 R&Q Shares and constituting approximately 11.39 per cent.
of R&Q's issued voting share capital.

Further details of these irrevocable undertakings, including the circumstances
in which they cease to apply, are set out in Part VI of the Circular.

11.  Special General Meeting

R&Q Shareholder approval is being sought to proceed with the Sale pursuant
to Rule 15 of the AIM Rules.

The Circular contains the Notice of a Special General Meeting that is being
convened at 2.30 p.m. on 11 January 2024 at 71 Fenchurch Street, Ground Floor,
London, EC3M 4BS, at which Special General Meeting the Resolution (set out in
full in the Notice of General Meeting) will be proposed.

R&Q SHAREHOLDERS WISHING TO VOTE ON THE RESOLUTION ARE STRONGLY URGED TO
DO SO THROUGH COMPLETION OF A FORM OF PROXY OR FORM OF INSTRUCTION (AS
APPLICABLE) which must be completed and submitted in accordance with the
instructions provided in connection therewith.

The Sale is deemed to be a disposal resulting in a fundamental change of
business for the purposes of Rule 15 of the AIM Rules, and consequently
closing of the Sale is dependent upon approval of the Resolution by
Shareholders. For the avoidance of doubt, R&Q will, on Closing, continue
to be classified as an operating company and not as an AIM cash shell pursuant
to AIM Rule 15.

 

 Enquiries to:

R&Q Insurance Holdings Ltd

 Tel: +44(0)20 7780 5850

 Jeff Hayman

 William Spiegel

 Tom Solomon

 Fenchurch Advisory Partners LLP (Financial
 Adviser)                              Tel: +44
 (0)20 7382 2222

 Kunal Gandhi

 John Sipp

 Brendan Perkins

 Richard Locke

 Tihomir Kerkenezov

 Barclays Bank PLC (Financial Adviser and Joint
 Broker)                          Tel: +44 (0)20 7632
 2322

 Gary Antenberg

 Andrew Tusa

 Michael Hart

 Howden Tiger (Financial Adviser)

            Tel : +44 (0)20 7398 4888

 Rob
 Bredahl

 Leo
 Beckham

 Numis Securities Limited (Nominated Adviser and Joint
 Broker)             Tel : +44 (0)20 7260 1000

 Charles
 Farquhar

 Giles
 Rolls

 FTI
 Consulting
    Tel: +44 (0)20 3727 1051

 Tom
 Blackwell

 

 

Important Notices

Barclays Bank PLC, acting through its Investment Bank ("Barclays"), which is
authorised by the Prudential Regulation Authority and regulated in the United
Kingdom by the FCA and the Prudential Regulation Authority, is acting
exclusively for R&Q and no one else in connection with the Sale and will
not be responsible to anyone other than R&Q for providing the protections
afforded to clients of Barclays nor for providing advice in relation to the
Sale or any other matter referred to in this Announcement.

Fenchurch Advisory Partners LLP ("Fenchurch") which is authorised and
regulated in the United Kingdom by the FCA, is acted as joint financial
adviser for R&Q and no one else in connection with the Sale and will not
be responsible to anyone other than R&Q for providing the protections
afforded to clients of Fenchurch nor for providing advice in relation to the
Sale or any other matter referred to in this Announcement.

TigerRisk Capital Markets & Advisory (UK) Limited ("Howden Tiger Capital
Markets & Advisory"), which is authorised and regulated in the United
Kingdom by the FCA, is acting as joint financial adviser for R&Q and no
one else in connection with the Sale and will not be responsible to anyone
other than R&Q for providing the protections afforded to clients of Howden
Tiger Capital Markets & Advisory nor for providing advice in relation to
the Sale or any other matter referred to in this Announcement.

Numis Securities Limited (trading for these purposes as Deutsche Numis)
("Deutsche Numis"), which is authorised and regulated in the United Kingdom by
the FCA, is acting exclusively as nominated adviser and broker to R&Q and
no one else in connection with the matters set out in this announcement and
will not regard any other person as its client in relation to the matters in
this announcement and will not be responsible to anyone other than R&Q for
providing the protections afforded to clients of Deutsche Numis, nor for
providing advice in relation to any matter referred to herein. Neither
Deutsche Numis nor any of its affiliates owes or accepts any duty, liability
or responsibility whatsoever (whether direct or indirect, whether in contract,
in tort, under statute or otherwise) to any person who is not a client of
Deutsche Numis in connection with this document any matter, arrangement or
statement contained or referred to herein or otherwise.

Further Information

This announcement is for information purposes only and is not intended to and
does not constitute, or form any part of, an offer to sell or an invitation to
purchase or subscribe for any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Acquisition or otherwise, nor
shall there be any sale, issuance or transfer of securities of R&Q in any
jurisdiction in contravention of applicable law. The Acquisition will be made
solely pursuant to the terms of the Circular, which will contain the full
terms and conditions of the Acquisition, including details of how to vote in
respect of the Acquisition and accompanied by forms of proxy and forms of
instruction for use at the General Meeting. Any decision in respect of, or in
response to, the Acquisition should be made only on the basis of the
information in the Circular. R&Q Shareholders are advised to read the
Circular and any other formal documentation published in relation to the
Acquisition carefully, once it has been published or dispatched.

This announcement has been prepared for the purpose of complying with Bermuda
and English law 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 of jurisdictions outside the United Kingdom and
Bermuda.

This announcement does not constitute a prospectus or prospectus equivalent
document.

Financial information relating to R&Q included in this announcement and
the Circular has been or shall have been prepared in accordance with
accounting standards applicable in the United States and may not be comparable
to financial information of UK companies or companies whose financial
statements are prepared in accordance with generally accepted accounting
principles in the United Kingdom.

Forward-Looking Statements

This announcement contains forward-looking statements, both with respect to
Onex and R&Q and their industries, that reflect their current views with
respect to future events and financial performance. Statements that are not
historical facts, including statements about Onex's or R&Q's beliefs,
plans or expectations, are forward-looking statements. These statements are
based on current plans, estimates and expectations, all of which involve risk
and uncertainty. Statements that include the words "expect," "intend," "plan,"
"believe," "project," "anticipate," "may", "could" or "would" or similar
statements of a future or forward-looking nature identify forward-looking
statements. Actual results may differ materially from those included in such
forward-looking statements and therefore you should not place undue reliance
on them.

A non-exclusive list of the important factors that could cause actual results
to differ materially from those in such forward-looking statements includes:
(a) changes in the size of claims relating to natural or man-made catastrophe
losses due to the preliminary nature of some reports and estimates of loss and
damage to date; (b) trends in rates for property and casualty insurance and
reinsurance; (c) the timely and full recoverability of reinsurance placed by
Onex or R&Q with third parties, or other amounts due to Onex or R&Q;
(d) changes in the projected amount of ceded reinsurance recoverables and the
ratings and credit worthiness of reinsurers; (e) actual loss experience from
insured or reinsured events and the timing of claims payments being faster or
the receipt of reinsurance recoverables being slower than anticipated; (f)
increased competition on the basis of pricing, capacity, coverage terms or
other factors such as the increased inflow of third party capital into
reinsurance markets, which could harm either Onex's or R&Q's ability to
maintain or increase its business volumes or profitability; (g) greater
frequency or severity of claims and loss activity than Onex's or R&Q's
respective underwriting, reserving or investment practices anticipate based on
historical experience or industry data; (h) changes in the global financial
markets, including the effects of inflation on Onex's or R&Q's business,
including on pricing and reserving, increased government involvement or
intervention in the financial services industry and changes in interest rates,
credit spreads, foreign currency exchange rates and future volatility in the
world's credit, financial and capital markets that adversely affect the
performance and valuation of either Onex's or R&Q's investments, financing
planning and access to such markets or general financial condition; (i)
changes in ratings, rating agency policies or practices; (j) the potential for
changes to methodologies, estimations and assumptions that underlie the
valuation of Onex's or R&Q's respective financial instruments that could
result in changes to investment valuations; (k) changes to Onex's or R&Q's
respective assessment as to whether it is more likely than not that it will be
required to sell, or has the intent to sell, available-for-sale debt
securities before their anticipated recovery; (l) the ability of Onex's or
R&Q's subsidiaries to pay dividends; (m) the potential effect of
legislative or regulatory developments in the jurisdictions in which Onex or
R&Q operates, such as those that could impact the financial markets or
increase their respective business costs and required capital levels,
including but not limited to changes in regulatory capital balances that must
be maintained by operating subsidiaries and governmental actions for the
purpose of stabilizing the financial markets; (n) the actual amount of new and
renewal business and acceptance of products and services, including new
products and services and the materialization of risks related to such
products and services; (o) changes in applicable tax laws, tax treaties or tax
regulations or the interpretation or enforcement thereof; (p) the effects of
mergers, acquisitions, divestitures and retrocession.

No Profit Forecasts or Estimates

No statement in this announcement is intended as a profit forecast or estimate
of the future financial performance of R&Q following completion of the
Sale for any period unless otherwise stated. Furthermore, no statement in this
announcement should be interpreted to mean that earnings or earnings per
R&Q Share for R&Q for the current or future financial years would
necessarily match or exceed the historical published earnings or earnings per
R&Q Share.

Footnotes

The following footnotes are contained throughout this announcement:

1 Global Insurance Run-off Survey 2022 by PwC, page 4

2 This represents the principal balance at 30 June 2023 and would include any
accrued and unpaid interest at Closing.

3 Represents management's estimate based on forecast of loss reserves and
collateral expected to be in place at closing under various reinsurance
agreements

4 Represents management's estimate of working capital required for 18 months
subsequent to Closing

5 Reflects 73.3 million shares upon conversion of $55 million of preferred
equity at 75 cents per share

6 Excluding minority stakes in MGAs

7 The principal differences between the statutory financial information of the
Accredited entities subject to the Sale, and the reported financials for
Accredited line of business are in respect of: (i) the inclusion of R&Q
Legacy exposure in the Accredited entities; (ii) the inclusion of certain
central costs to the Accredited entities that support both program management
and legacy; (iii) the inclusion of €25 million of debt in the legal entities
and (iv) investment income in the legal entities supporting both program
management and legacy insurance

8 Represents management's estimate based on forecast of retained earnings
through closing and AM Best treatment of available and required capital under
BCAR model

9 Represents management's estimate based on forecast of retained earnings
through closing and AM Best treatment of available and required capital under
BCAR model

10 Represents management's estimate based on forecast of retained earnings
through closing and AM Best treatment of available and required capital under
BCAR model

11 Represents management's estimate based on forecast of retained earnings
through closing and AM Best treatment of available and required capital under
BCAR model

12 Global Insurance Run-off Survey 2022 by PwC, page 4

13 Global Insurance Run-off Survey 2022 by PwC

 

APPENDIX 1

FURTHER INFORMATION ON THE SALE OF ACCREDITED

Background on financial performance of Accredited

Accredited is a leading program manager, providing A- rated insurance capacity
in the US, UK and Europe. Accredited's US, UK and EU-regulated insurance
companies act as an intermediary between MGAs and reinsurers. Accredited has
grown significantly over the last three years achieving Gross Written Premium
and Fee Income of $1.8 billion and $80 million(6), respectively, in the twelve
months to 31 December 2022, and $1.1 billion and $46 million, respectively, in
the six months to 30 June 2023.

As at 30 June 2023, the unaudited gross assets and shareholders' equity of the
business subject to the Sale were $4.3 billion(7) and $243 million(8),
respectively. As at 31 December 2022, the unaudited gross assets and
shareholders' equity of the business subject to the Sale were $3.9 billion(8)
and $225 million(9), respectively. For the financial year ended 31 December
2022, the unaudited statutory loss before tax for the business subject to the
Sale was $(16) million(10). For the six months ended 30 June 2023, the
unaudited statutory profit before tax for the business subject to the Sale was
$13 million(11).

Board oversight of the sale process

On 4 April 2023, R&Q announced that it would explore strategic initiatives
to separate its R&Q Legacy and Accredited businesses.

A strategic transaction committee (the "Committee") was formed to provide
governance oversight of the Sale, comprised of just the Non-Executive
Directors.

The Committee adopted a protocol for the purpose of managing any potential
conflicts of interest which might arise for certain members of management if
bids were received which requested that such members of management form part
of the management team that would continue as part of Accredited following the
Sale. Pursuant to the protocol, it was agreed that the Chairman would (i)
serve as principal in contractual negotiations with bidders; and (ii)
supervise interactions between bidders and management. No conversations
relating to management compensation were held by the Committee.

The Committee met numerous times to review progress of the sale process. For
the first part of the Committee's meetings to discuss the sale process, the
Committee had access to the Executive Directors who provided management's
perspective and input. For the second part of the meetings, the Committee
discussed the Sale without the Executive Directors being present. The decision
to exclude the Executive Directors from the decision-making process was taken
to avoid any risk or perception of any conflicts of interest arising as a
result of any bidders seeking to involve the Executive Directors in their
future plans for the Accredited business. All decisions and approvals took
place without the Executive Directors being present.

The Committee had access to R&Q's advisers throughout the process and
advisers attended Committee meetings.

Management decisions during the sale process

At the outset of the sale process, the Non-Executive Directors anticipated
that the sale of Accredited could be to a private equity investor (without an
existing management team) and because there was no global CEO or CFO for
Accredited, could require William Spiegel and Thomas Solomon to transition
with Accredited. Making William and Thomas available, at the discretion of the
prospective purchaser, ensured the realisation of maximum value for the
Accredited business. In fact, three out of the four non-binding offers
received at the end of the second round of the sale process (discussed below)
required William Spiegel and Thomas Solomon to transfer from R&Q to
Accredited (and the fourth did not proceed to detailed discussions relating to
the continuation of management).

Coordination of the sale process

R&Q made contact with 94 counterparties representing both potential
strategic and financial buyers in relation to a proposed sale of Accredited.
The potential counterparties were selected with the input of R&Q's
advisers based on, among other factors, their familiarity with and interest in
Accredited's business and the industry, previous experiences and transaction
activity in the industry and their expected ability to successfully complete
the transaction. 59 of the counterparties entered into non-disclosure
agreements with R&Q and were included in the initial non-binding offer
stage of the process, receiving a confidential information memorandum
including a recorded voice over provided by William Spiegel and Thomas
Solomon. 16 non-binding offers were received at the end of the initial stage
of the process.

Nine counterparties were invited to take part in round two of the sale
process, which was a detailed diligence phase that was conducted over nine
weeks between 5 June 2023 and 9 August 2023. Counterparties attended expert
sessions and received access to a Virtual Data Room. Over 50 expert sessions
were held with the Company. At the end of the second round, four
counterparties submitted non-binding offers.

After careful analysis of the merits of each of the non-binding offers, taking
into account factors such as implied overall value, the availability of
proceeds on completion of the transaction, the availability of funding and
deal execution risk, the Purchaser was then selected to enter into an
exclusivity agreement for an initial period of 30 days followed by an
extension of 15 days. The Purchaser's offer was considered to be stronger than
the competing offers, especially when considering the deal execution risk as
the due diligence undertaken and the progress on negotiating transactions
documents by the Purchaser was more advanced at that stage of the sale
process.

The Purchaser then undertook a period of confirmatory due diligence and the
parties engaged in the negotiation of the definitive transaction
documentation. The parties entered into definitive transaction documentation
on 20 October 2023.

Information relating to Onex

Onex is an investor and asset manager that invests capital on behalf of Onex
shareholders and clients across the globe. Formed in 1984, Onex has a long
track record of creating value for clients and shareholders. Onex's two
primary businesses are Private Equity and Credit. In Private Equity, Onex
raises funds from third-party investors, or limited partners, and invest them,
along with Onex's own investing capital, through the funds of their private
equity platforms, Onex Partners and ONCAP. Similarly, in Credit, Onex raises
and invests capital across several private credit, public credit and public
equity strategies. Onex's investors include a broad range of global clients,
including public and private pension plans, sovereign wealth funds, insurance
companies and family offices. In total, Onex has approximately $50 billion in
assets under management, of which approximately $8 billion is Onex's own
investing capital. With offices in Toronto, New York, New Jersey, Boston and
London, Onex and its experienced management teams are collectively the largest
investors across Onex's platforms.

 

APPENDIX 2

FURTHER INFORMATION ON R&Q LEGACY

Future strategy for R&Q Legacy

Post separation from Accredited, R&Q Legacy will be a refocused, global
legacy insurance business focused on managing small and medium sized non-life
legacy insurance portfolios, providing creative financial solutions to owners
of discontinued insurance and reinsurance business as well as corporate
entities.

Guided by a strong leadership core, R&Q Legacy's platform will continue to
leverage its unique go-to-market strategy to grow reserves under management
and generate fee income. In 2021, R&Q launched Gibson Re, a
Bermuda-domiciled collateralised reinsurer with approximately $300 million of
long-term, third-party capital that underpins R&Q Legacy's ability to
deploy capital and offer innovative legacy solutions. The dedicated
reinsurance sidecar reinsures 80 per cent. of R&Q Legacy's transactions
with R&Q Legacy retaining 20 per cent. of the risk exposure. Following
R&Q's landmark deal earlier this year to acquire and professionally manage
the non-insurance legacy liabilities of MSA Safety Inc., R&Q Legacy now
earns fees from two distinct but complementary pools of liabilities:
traditional insurance reserves and corporate non-insurance liabilities.

R&Q Legacy's continued growth will also be supported by the strong secular
tailwinds underpinning a large and growing non-life legacy market with
estimated total global reserves of $960 billion in 2022, an increase of $96
billion from 2021(12). Of the 400+ publicly disclosed deals completed in the
last 10 years, 135+ have been in the last 3 years as recycling capital has
become an increasing focus of live carriers as they take advantage of
hardening rates, resulting in more consistent deal flow to the legacy market.
There also exists a significant opportunity within the corporate liability
market, with >$3 billion of liabilities transferred since 2016, and an
estimated additional $68 billion of corporate liabilities on balance
sheets(13).

Within this growing market, R&Q connects insurers and corporates seeking
solutions with capital providers. R&Q's global M&A team has extensive
experience sourcing deals, while Underwriting and Integrations teams carefully
and diligently select and onboard portfolios to the R&Q platform.
R&Q's legacy platform has offices in Bermuda, the US and the UK with over
100 people across M&A, claims management, servicing, actuarial and finance
functions. Bespoke and tailored solutions for clients include capital relief
and redeployment, earnings management and volatility reduction, facilitation
of the strategic exit from non-core portfolios and businesses, collateral
release, and economic and legal finality. These solutions are achieved through
a variety of products, mainly loss portfolio transfers, adverse development
covers, acquisitions, insurance business / Part VII transfers, and novations.

From a financial perspective, R&Q Legacy expects to be profitable by the
end of 2025. In order to achieve this goal, R&Q Legacy has deployed a
three-pronged strategy consisting of growing fee income, reducing expenses,
and decreasing balance sheet volatility.

Leveraging the Company's expertise and existing capabilities, R&Q Legacy
expects to double fee income by the end of 2025 compared to 1H 2023 annualised
fee income. Gibson Re allows R&Q to continue to simplify the Legacy
Insurance business model from one with irregular underwriting income and
seasonality to one with a predictable and high-quality recurring fee income
stream. In addition to acquiring traditional insurance reserves via Gibson Re,
R&Q has also demonstrated leadership in the non-insurance legacy liability
space through its joint venture with Obra Capital, Inc. and acquisition of MSA
Safety Inc.'s product liabilities. R&Q Legacy will continue to seek
opportunities in this space, thus earning fee income through multiple pools of
liabilities.

In searching for new opportunities, R&Q Legacy can lean on a diverse and
experienced global origination team that sources both direct and brokered
deals in local markets offering solutions to corporates and (re)insurers
alike. In fact, the global origination team's current pipeline contains
greater than $850 million in reserves and on average the business has 12-20
'live' deals across various stages of the deal life cycle representing $750
million - $1.2 billion of total reserves.

R&Q Legacy will also continue to identify and action cost-cutting
opportunities and the Company expects to reduce expenses by 15 per cent. to 20
per cent. in 2025 relative to an adjusted annualised H1 2023 expense base that
includes certain assumptions around R&Q Legacy's standalone cost
structure. This cost cutting strategy includes several initiatives such as
making the business more automated, efficient, and scalable, legal entity
consolidation, organisational and footprint rationalisation, enhanced vendor
management and rigor, and strategic sales of non-core assets.

Lastly, R&Q Legacy will pursue de-risking strategies across the portfolio
to meaningfully reduce volatility and improve stability and the quality of
earnings. Options being explored by the company include loss portfolio
transfers and the purchase of adverse development cover on certain portfolios,
the sale of non-core assets, and the sale or securitisation of back book
R&Q Legacy liabilities.

R&Q Legacy maintains a diversified and high-quality investment portfolio,
with more than 74 per cent. invested in A- rated assets and above. Given the
short average asset duration of the portfolio, as these investments mature,
R&Q Legacy expects to reinvest at the prevailing market yields and
generate incremental investment income.

R&Q Legacy also expects to have the ability to release a significant
amount of capital over the next 5 years and generate incremental investment
income. R&Q Legacy expects over $100 million of cumulative surplus capital
to be generated as claims payments are made, thus releasing capital held
against reserves. This is in addition to the estimated $40 million to $80
million of additional collateral R&Q Legacy will be required to hold
against existing legacy exposure retained by Accredited, which R&Q Legacy
expects to be released and available over the next few years as the underlying
exposures are reduced and eliminated.

 

APPENDIX 3

RISK FACTORS

R&Q Shareholders should carefully consider the specific risk factors set
out below in addition to the other information contained in the Circular
before voting on the Resolution. The Directors consider the following risks
and other factors to be the most significant for the R&Q Shareholders for
the purpose of considering the Resolution, but the risks listed do not purport
to comprise all those risks associated with the Resolution and do not purport
to set out the general business risks associated with R&Q. The risks are
not set out in any particular order of priority. Additional risks and
uncertainties not currently known to the Directors may also have an adverse
effect on the Company's business.

If any of the following occur, the Company's business, financial condition,
capital resources, results and/or future operations could be materially and
adversely affected. In this event, the price of the R&Q Shares could
decline and R&Q Shareholders may lose all or part of their investment.

1.         Risks relating to R&Q's current financing arrangements

R&Q is dependent on ongoing support from its lending banks, providers of
credit and other financing providers

R&Q remains in close dialogue with its lending banks, providers of credit
and other financing providers. R&Q will require support from these parties
in relation to drawdowns under the existing Main Banking Facility, ongoing
renewals or redemptions, ongoing requests for waivers for potential covenant
breaches and for the necessary consents, approvals, agreements, waivers and
releases required to enable the Sale to take place.

A potential default or cross-default by R&Q on its existing debt
facilities may lead its lenders to take action to protect their interests by
requiring collateral or enforcing their security over certain R&Q assets.

Should any of R&Q's lenders seek to take such action, unless the Directors
are able to satisfy themselves that an alternative financial restructuring is
likely to be successful, the Directors would be required to take, or cause
R&Q to take, steps towards appropriate insolvency proceedings. In such
event, it is likely that trading in the R&Q shares would be suspended
pending a successful resolution or a winding up of R&Q and the R&Q
Group. Clearly in such circumstances there is a risk that this would result in
a materially worse outcome for R&Q and its stakeholders and that R&Q
Shareholders would lose all of their investment in R&Q.

Current financial leverage of R&Q is unsustainable

The Board believes that the current financial leverage of R&Q is
unsustainable and if the Sale were not to proceed and the Available Net Cash
Proceeds were not available to facilitate a material financial de-leveraging
of R&Q, R&Q may not be able to repay its debt facilities as they
become due and R&Q would therefore be unable to continue as a going
concern.

2.         Risks relating to the Sale

The Sale may not proceed to Closing

Closing of the Sale is conditional upon the satisfaction (or waiver, if
applicable) of certain conditions, including but not limited to:

(i)  obtaining required regulatory approvals from the Arizona Department of
Insurance, the Florida Office of Insurance Regulation, the Prudential
Regulatory Authority, the Malta Financial Services Authority and the European
Commission in its capacity as antitrust authority and none of the required
regulatory approvals must impose a Burdensome Condition (as defined in Part VI
of the Circular);

(ii)  there being no law or governmental order prohibiting the Sale or makes
the Sale illegal;

(iii) the approval by the R&Q Shareholders of the Resolution;

(iv) accuracy of each of the parties' representations and warranties set forth
in the Purchase and Sale Agreement and compliance by each party with its
covenants set forth in the Purchase and Sale Agreement in all material
respects and delivery of related certificates;

(v) maintaining Accredited's AM Best A- financial strength rating until the
date of Closing, and providing to Purchaser evidence reasonably satisfactory
to Purchaser assuring through a ratings evaluation service from AM Best that
Accredited shall maintain such rating with a stable outlook immediately
following Closing;

(vi) obtaining required consents, approvals, agreements, waivers and releases
from R&Q's lenders under its financing facilities;

(vii)   delivering evidence reasonably acceptable to Purchaser that at the
time of Closing Accredited will be capitalised in accordance with applicable
insurance law;

(viii)   entering into mutually agreed arrangements regarding R&Q
Legacy's (a) reinsurance of existing legacy insurance and other exposures
being retained by Accredited and (b) funding of the collateral required by
associated reinsurance agreements between Accredited and R&Q Legacy; and

(ix) Accredited's membership interests in a corporate legacy joint venture
having been transferred to R&Q or an affiliate of R&Q (other than
Accredited) prior to or substantially concurrently with the Closing.

There can be no assurance that all conditions will be satisfied and if any of
the conditions described above is not satisfied (or waived, if applicable),
the Purchase and Sale Agreement may be terminated in accordance with the terms
set forth in the Purchase and Sale Agreement and, in which case, Closing would
not take place. Any of the conditions, where legally permissible, may be
waived by a party that requires the satisfaction of such condition.

R&Q's financing providers may not consent to the Sale

A summary of the financing obligations of the R&Q Group are set out at
paragraph 7 of this Announcement.

In terms of specific consents and releases required:

i)       under the Main Banking Facility:

a.     the Company has pledged the entire issued share capital of RQAH in
favour of NatWest;

b.    RQAH has guaranteed the Main Banking Facility in full;

c.     RQAH has pledged its assets in favour of NatWest; and

d.    RQAH has pledged the entire issued share capital of Accredited
International Insurance Group, Inc. in favour of NatWest,

and therefore the guarantee and security listed above will need to be released
on or ahead of Closing of the Sale;

ii)      RQAH has guaranteed the Senior Notes in full and therefore this
guarantee will need to be released ahead of Closing of the Sale; and

iii)     if the Company disposes of either Accredited Insurance (Europe)
Limited or Accredited Surety & Casualty Inc. Florida (both of which sit
within the Accredited) without the prior written consent of the majority of
the holders of the Senior Notes, a put event is triggered which would provide
the holders of the Senior Notes with a right to request redemption of the
Senior Notes. As such, written consent of the holders of the Senior Notes will
be required ahead of Closing the Sale.

In addition to the consents and releases noted above, R&Q will require
from its financing providers:

i)   extensions to waivers for potential covenant breaches, which have
currently been obtained until 15 December 2023. It is the Board's expectation
that it will need to obtain further extensions to the waivers until
negotiations with R&Q's financing providers have been completed;

ii)   variations to certain terms including in relation to business
transfers and the distribution of proceeds from the Sale and to reflect the
alteration to the profile of the R&Q Group as a result of the Sale; and

iii)  deferrals of payment obligations both prior to and around the Sale.

Unless all of the above consents, approvals, agreements, waivers and releases
are forthcoming, the condition relating to the approval of R&Q's lenders
to the Sale will not be met. In such circumstances, the Purchase and Sale
Agreement may be terminated and, in which case, Closing of the Sale would not
take place.

Potential for third party interference with the Sale

As a quoted company, R&Q could receive approaches from third parties
seeking to instigate a public takeover of R&Q or seeking to acquire
Accredited which might delay or prevent execution of the Sale. Although the
Purchase and Sale Agreement is binding on R&Q, in the event of an
attractive takeover offer or other offer which was predicated on the
termination of the Purchase and Sale Agreement, the Directors would be obliged
to consider that offer in accordance with their fiduciary duties and the
Directors might consequently be required to withdraw or change their
recommendation of the Resolution and the Sale. If the Resolution is not
approved, the Purchaser may terminate the Purchase and Sale Agreement and, in
which case, Closing would not take place.

Exposure to liability under the Purchase and Sale Agreement

The Purchase and Sale Agreement contains representations and warranties
relating to the Accredited business and R&Q as well as covenants as to how
R&Q will operate the Accredited business until Closing. R&Q agreed to
indemnify the Purchaser for any and all losses resulting from breaches of any
representations and warranties, covenants and agreements contained in the
Purchase and Sale Agreement. R&Q also indemnifies the Purchaser for any
losses resulting from: (a) pre-Closing taxes; (b) any liability of the R&Q
business or any of its businesses (other than Accredited); (c) any liability
with respect to employees terminated prior to Closing who used to primarily
work for Accredited prior to such termination; (d) reinsurance unrecoverable
due to any R&Q Legacy or Accredited entity's or any independent MGA's
pre-Closing acts, errors or omissions; (e) any reduction in value of any
amount recoverable under any reinsurance contract as a result of such
reinsurance contract not being executed where the applicable reinsurance
policy commenced at least 5 months prior to Closing; (f) any liability with
respect to a class action lawsuit, Crain et al. v. Accredited Surety and
Casualty Company, Inc., et al.; (g) any liability of AIEL to pay commissions
or commission adjustments to reinsurers of the Specified Program Business,
except to the extent AIEL has actually received, and is entitled to retain,
corresponding amounts from the relevant MGA under any UCA; and (h) any
write-off, impairment loss or bad debt provision (without double counting)
recognised by any Accredited entity or affiliate after Closing in relation to
amounts due from certain MGAs in respect of commissions or adjustments to
commissions under a UCA first entered into prior to Closing if and to the
extent such loss is not actually recovered by the relevant Accredited entity
or affiliate pursuant to an affiliate reinsurance agreement between R&Q
Legacy and Accredited.

If R&Q should incur liabilities under the Purchase and Sale Agreement or
other transaction documentation, the costs of such liabilities could have an
adverse effect on its business, financial condition and results. R&Q's
liability in respect of the indemnification provisions of the Purchase and
Sale Agreement is subject to certain limitations, including de minimis and
aggregate claims thresholds, financial liability caps and time limits for
bringing a claim. The maximum liability of R&Q for all claims under the
indemnification provisions of the Purchase and Sale Agreement is capped, in
aggregate, at $465 million.

3.         Risks relating to the Sale not proceeding

Downgrade of Accredited's AM Best Rating

Accredited relies on an 'A-' financial strength rating from AM Best to conduct
business and historically relied on the financial strength of the broader
R&Q Group to obtain its financial strength rating. However, following a
review in Q1 2023 the Board concluded that given Accredited's size and scale
it was in the best interests of R&Q's stakeholders for Accredited to
obtain a standalone rating without influence from the broader R&Q Group.
An important factor in obtaining a standalone rating for Accredited was AM
Best's guidance that a legal separation of Accredited and R&Q Legacy
subsidiaries followed by a sale of at least 51 per cent. of the equity
interests in Accredited was essential to enable Accredited to obtain a fully
independent rating.

In response to the guidance from AM Best, the Board announced on 4 April 2023
a legal reorganisation to separate the subsidiaries of R&Q Legacy and
Accredited. The legal reorganisation was completed in June 2023. As of that
date, AM Best recognised Accredited as an independent rating unit with a
financial strength rating of 'A-'. The rating however, remained "Under Review
With Negative Implications" subject to the sale and deconsolidation of
Accredited.

If the Sale does not complete, the Board believes that there is a significant
risk that AM Best will downgrade Accredited which would have a detrimental
impact on Accredited's ability to continue to successfully operate its
business, particularly in the United States where an 'A-' financial strength
rating is a minimum requirement from Accredited's counterparties. A number of
counterparties have, in fact, communicated to the Company that they will be
withdrawing their business in the event of a downgrade of Accredited. Such a
downgrade would therefore have material implications on R&Q's ability to
continue as a going concern.

Impact of the increasing regulatory requirements relating to the Company's
capital

The majority of the Group's insurance entities are subject to minimum capital
requirements. This includes the Funds at Lloyd's requirement to support its
syndicate participations to satisfy external regulatory requirements, meeting
its Group Capital Adequacy Requirement under the Bermuda Monetary Authority
requirements, as its Group Supervisor, and Solvency II requirements in
multiple jurisdictions (e.g. UK, Malta and Bermuda). Increasing minimum
capital requirements mean that, should the Sale not proceed, the Group may
find it difficult to sustain growth and profitability.

No guarantee of an equivalent bid

If the Sale does not proceed, there is no guarantee that the Company would be
able to dispose of Accredited at a later date on the same or more favourable
terms than the Purchase and Sale Agreement. There is a risk that the value of
Accredited may erode over time if the Company is unable to invest the
resources necessary to drive and deliver the growth potential of Accredited.
Accordingly, there is no guarantee that the valuation under the Purchase and
Sale Agreement would be available in any future attempted transaction
involving Accredited. Even if a higher valuation were achieved, there is no
assurance that there would not be a higher execution risk attached.

Inability to realise value if the Sale does not proceed to Closing

The Board believes that the Sale currently provides the best opportunity to
realise an attractive and certain value for Accredited. If the Sale does not
complete, the value of Accredited to the Group is expected by the Board to be
significantly lower than can be realised by way of the Sale, taking into
account the increased risk of downgrade of Accredited by AM Best and the
detrimental impact this would have on Accredited's ability to successfully
operate its business. Such a downgrade would likely result in immediate
non-renewals of programs, loss of reinsurance capacity and departure of
Accredited management. This could result in the financial position of the
Group being materially different to the position it would be in if the Sale
completed. There can be no assurance of a future sale or other transaction
involving Accredited if the Sale does not proceed.

There may be an adverse impact on the Group's reputation and share price if
the Sale does not proceed due to amplified media scrutiny arising in
connection with the attempted Sale. Any such reputational risk could adversely
affect the Group's business, financial condition and results of operations.

Sale and separation costs

If the Sale does not complete, the Company will be required to meet its
accrued costs in respect of the aborted Sale, will not receive the proceeds
from the Sale and will forgo the other benefits of the Sale.

Potentially disruptive effect on Accredited

If the Sale does not proceed, this may lead to management and employee
distraction for Accredited and concern due to the level of perceived
uncertainty regarding the future ownership of Accredited, which may adversely
affect the ability to retain or recruit managers or other employees in the
Accredited business. Customer sentiment, including underlying MGAs and
reinsurers, may also be negatively affected, which may have an adverse effect
on the performance of Accredited under the R&Q's ownership. This may
adversely affect R&Q's business, financial condition and results of
operations.

4.         Risks relating to R&Q Legacy

The working capital of R&Q Legacy

R&Q Legacy will retain an estimated $50 million of cash from the Estimated
Net Cash Proceeds for the purpose of working capital. However, management's
estimate of the level of cash required to be retained to provide sufficient
working capital is subject to a number of assumptions with associated risks
and uncertainties. These include the following:

Debt - management have made certain assumptions in relation to the repayment
and restructuring of the Group's debt. However, negotiations with the Group's
financing providers are ongoing. The working capital requirements of R&Q
Legacy will depend on the outcome of those negotiations.

Subsidiary capital resources - a number of material entities within both
R&Q Legacy and Accredited are required to operate within target capital
coverage ratios. There is a risk that capital resources are insufficient to
meet target capital coverage in the Group's material entities in the event of
a shock in the short term - for example, expense shock or deterioration in
reserves.

Timing of completion - there is a risk of an unfavourable movement in the
working capital position prior to completion of the Sale which increases the
working capital shortfall. This could be exacerbated by any delay to the
anticipated date of completion of the Sale.

R&Q Legacy M&A pipeline - management have made certain assumptions in
relation to the R&Q Legacy M&A pipeline. There are risks associated
with the inclusion of the R&Q Legacy M&A pipeline and associated fee
income. These include:

Conversion: each transaction requires agreement with the relevant counterparty
and, crucially, from regulators. Changes in regulatory requirements have the
potential to limit the availability of corporate deals to feed the M&A
pipeline. Further detail is included in "R&Q Legacy's Business Development
and Growth" and "Regulatory Intervention" below.

Timing: any delays in deal conversion may have an impact on management's
forecasts.

Reinsurance coverage: the present sidecar agreement with Gibson Re closes to
new deals in September 2024. Management have assumed and is planning for a
second vehicle on broadly similar terms, however this coverage is not
guaranteed. For further detail, see "Third-Party/ Co-Investment Capital"
below.

Reserves - there is a risk that stress scenarios occur which could impact
forecast liquidity. In addition to the effect on capital resources, such a
stress would also likely increase capital requirements. Further detail on
reserving risk is included in "Exposure Management (Reserving and
Reinsurance)" below.

Intercompany debt - there were approximately $120 million loans issued by
regulated subsidiaries to Group holding companies as at 31 December 2022, pro
forma for the sale of Accredited and new loans subsequent to 31 December 2022.
The continued recognition and valuation of these intercompany receivables as
assets supports the available capital and without this a number of regulated
entities might require capital injections to make good this shortfall.

Costs - management have made certain assumptions relating to the R&Q
Legacy standalone cost base and the ability of R&Q to recharge operating
costs to subsidiaries. Should these assumptions prove not to be the case,
further capital injections may be required.

Investments - there is a risk that the Group fails to realise an adequate
return on the invested funds under its control and/or experiences a default on
investments held. An investment value stress would reduce available capital
resources in the subsidiaries that use market value balance sheets as the
basis for regulatory capital.

Capital releases from operating subsidiaries - management have made certain
assumptions regarding future capital releases from operating subsidiaries.
However, there is a risk that stress scenarios could impact operating
subsidiaries such that future anticipated capital releases from such entities
may be reduced or not occur as forecast.

Regulatory intervention - there is a risk that regulators may restrict the
Group's activities. Actions could include declining to approve new deals and
potentially limiting the activities of the Group. Further detail is included
in "Regulatory Intervention" below.

R&Q Legacy's Business Development and Growth

These are the risks that R&Q Legacy fails to manage both the focus on its
core competencies and its simultaneous initiatives, as it implements its range
of strategic objectives and/or fails to raise the necessary capital to finance
its new initiatives. Additionally, there is the risk that R&Q Legacy fails
to identify and harness new business opportunities, and/or its profitability
is impaired following the establishment/acquisition of new business.

There is also the risk that R&Q Legacy or third parties are unable and/or
unwilling to continue to invest in Divisional/Group activity. R&Q Legacy
operates in a competitive environment and faces competition from current and
potential competitors. R&Q Legacy may not be able to compete effectively
with such competitors, particularly those with far greater capital resources.

R&Q Legacy's activities demand significant human and financial capital and
the challenge for R&Q Legacy is to ensure that limited resource is
deployed appropriately at the right time, with the commensurate level of
management control and oversight. Where growth occurs without requisite
management controls in place, there is an increased risk that business
objectives are not aligned, new business targets not met and costs not
adequately managed.

Regulatory Intervention

The acquisition of insurance companies, businesses or portfolios will normally
require the approval of the relevant regulator, in respect of, not only
R&Q Legacy, but also of its controllers and potentially R&Q Legacy's
directors and officers. There is a risk that one or more regulators across the
jurisdictions in which R&Q Legacy operates may determine not to approve
further risk taking transactions, either temporarily or for a longer duration.
Such determination may be conditioned on an assessment of the capital and
reserve adequacy of the Group.

Were a regulator or regulators to force the cessation of new risk taking
transactions in their respective jurisdictions, even temporarily, it would
create uncertainty around achieving the go-forward legacy business plan by
reducing the competitiveness with which the Group can price and underwrite
deals.

Furthermore, responding to inquiries from a regulator may require significant
manpower and draw from resources who would otherwise be allocated to
growth-oriented initiatives.

Exposure Management (Reserving and Reinsurance)

There is a risk that the Group adopts a reserving methodology that produces
incorrect reserving, exposing the Group to reserving risk and presenting
liquidity and profitability issues and also potential litigation. Incorrect
reserving can also arise if the process does not take account of all relevant
information (e.g. historical loss data, emerging legislation) leading to over
or understated reserves.

Reserves are monies earmarked for a specific purpose. Insurers establish
unearned premium reserves and loss reserves which are indicated on their
balance sheets. Unearned premium reserves show the aggregate amount of
premiums that would be returned to policyholders if all policies were
cancelled on the date the balance sheet was prepared. Loss reserves are
estimates of outstanding losses, loss adjustment expenses and other related
items.

Reserve risk is a key risk to the Group given its large portfolio of insurance
companies either in run-off or accepting legacy transactions of lines of
business which in many cases have a long tail (e.g. US workers' compensation,
asbestos and noise induced hearing loss).

Reserve risk represents a significant risk to the Group in terms of both
driving required capital levels and the threat to volatility of earnings. In
the Group's run-off entities, reserve risk represents the most significant
source of risk concerning balance sheet items.

Third-Party/Co-Investment Capital

There is a risk that R&Q Legacy is unable to access the third-party
capital required to support its transition to a fee-based business model thus
impacting its ability to sustain growth. As R&Q Legacy transitions to a
fee-based business model, it requires the ability to raise additional
third-party capital and liquidity to fund the formation and launching of
reinsurance vehicles that allow R&Q Legacy to support a capital-light
legacy underwriting business, reduce its retained risk and generate recurring
management fees. If third-party capital becomes either unavailable or
economically less attractive, the viability of such vehicles and therefore of
R&Q Legacy's strategy to transition to a fee-based business model may be
significantly impacted.

Third-party capital may become unavailable for or less attractive to R&Q
Legacy as a result of both macroeconomic or Group-specific factors. Volatility
in financial markets as well as general economic and financing conditions are
examples of macroeconomic factors that may result in third-party capital
becoming unavailable or less attractive.

Group-specific factors may also impact the availability of third-party capital
necessary to support R&Q Legacy's strategy. Third-party investors may be
less willing to co-invest in these vehicles if their views on R&Q Legacy
become negative as a result of poor financial or operational performance,
negative reputational impacts, or any other events that may negatively impact
their perception of R&Q Legacy as a co-investor.

Expense Management Initiatives

This is the risk that R&Q Legacy fails to effectively execute on its
strategy to reduce expenses.

The R&Q Legacy team has identified and taken action on a number of
opportunities to reduce expenses, including simplifying its legal entity
structure and rationalising its real estate footprint. Work is also underway
to automate the input of data R&Q Legacy receives from its Third-Party
Administrators and move its internal systems to the cloud. Better use of data
is enabling R&Q Legacy to make smarter decisions, quicker, while more
automated processing is reducing duplication and costs. As seen with
Accredited, R&Q Legacy expects this work to create operational leverage
benefits as it grow its Reserves Under Management. These expense management
strategies are expected to have a significant impact on R&Q Legacy's
results of operations and therefore on R&Q Legacy's ability to meet its
goals in returning to profitability.

There are several factors that may impact R&Q Legacy's ability to manage
expenses effectively. Some of these factors are related to the execution of
the R&Q Legacy's cost-cutting strategies including, but not limited to,
higher-than-expected cost of savings and longer-than-expected implementation
of automation solutions. However, R&Q Legacy's expenses can also be
impacted by exogenous factors. Most notably, R&Q Legacy may experience
higher labour costs resulting from overall wage inflation. If R&Q Legacy
is unable to execute on its expense management plans, it may fail to achieve
its desired results of operations.

Collateralisation Requests

This is the risk that R&Q Legacy may be subject to additional collateral
requirements by regulators or counterparties stemming from a perceived
deterioration in R&Q Legacy's credit quality. As a result of its normal
operating activities, R&Q Legacy is regularly required to post collateral
to counterparties and to hold certain amount of collateral subject to
regulatory requirements. The levels of these collaterals are impacted, amongst
other factors, by R&Q Legacy's credit risk as perceived by the party
requesting collateralisation. If R&Q Legacy's perceived credit quality
were to deteriorate, these parties may require higher levels of
collateralisation even if the risk profile of the underlying activity or
contract remains unchanged. Higher collateral requirements have significant
implications to the capital and liquidity adequacy of R&Q Legacy.

Counterparties may associate R&Q Legacy with a lower credit quality as a
result of negative impacts to R&Q Legacy's operations, its reputation or
their expectations regarding future performance of R&Q Legacy. For
example, if R&Q Legacy fails to meet certain financial or operational
goals, counterparties may believe R&Q Legacy is more likely to default on
its obligations and therefore may require higher collateral to protect against
this increased risk.

Collateral requirements have a direct impact on R&Q Legacy's liquidity
needs. In order to meet higher collateral requirements, R&Q Legacy may
need to source additional liquidity using a set of possible mechanisms that
can have a negative impact to shareholders, R&Q Legacy or other
stakeholders. For example, R&Q Legacy may need to raise additional
capital, which can include equity, debt or other instruments that are dilutive
to shareholders or increase R&Q Legacy's leverage, or R&Q Legacy may
need to dispose of assets at unfavourable terms.

 

APPENDIX 4

DEFINITIONS

"Accredited"
Randall & Quilter America Holdings Inc., Accredited International
Insurance Group Inc., Accredited America Insurance Holding Corporation,
Accredited Specialty Insurance Company, Accredited Surety and Casualty
Company, Inc., Accredited Bond Agencies Inc., Accredited R&Q Limited,
R&Q Malta Holdings Limited and Accredited Insurance (Europe) Limited,
Accredited Management Company, LLC and each other Subsidiary of Randall &
Quilter America Holding, Inc formed prior to Closing

"AIEL"
Accredited Insurance (Europe) Limited (formerly known as R&Q Insurance
(Malta) Limited)

"AIEL Intercompany Loan"                the intercompany loan
owed by R&Q to Accredited Insurance (Europe) Limited (formerly known as
R&Q Insurance (Malta) Limited).

"AIM"
AIM, a market operated by the London Stock Exchange

"AIM
Rules"
the AIM Rules for Companies published by the London Stock Exchange (as amended
from time to time)

"Available Net Cash Proceeds"          Expected Net Cash Proceeds
less adjustments as set out in the Purchase and Sale Agreement and as
summarised in paragraph 9 of this Announcement

"Board" or "Directors"                        the
directors of the Company or any duly appointed committee thereof

"Bye-laws"
the bye-laws of R&Q (as amended from time to time)

"Business
Day"                                  a day
(other than Saturday, Sunday or a public holiday) on which banks in the City
of London are open for business generally

"Closing"
closing of the Sale under the terms of the Purchase and Sale Agreement

"Company" or "R&Q"
R&Q Insurance Holdings Ltd, Clarendon House, 2 Church Street, Hamilton
HM11, Bermuda

"CREST"
the relevant system (as defined in the CREST Regulations) in respect of which
Euroclear UK & International Limited is the Operator (as defined in the
CREST Regulations)

"CREST Regulations"                        the
Uncertificated Securities Regulations 2001 (as amended)

"Custodian"
Computershare Company Nominees Limited in its capacity as custodian of the
Depositary Interests

"Depositary Interests"                        the
dematerialised depositary interests issued in CREST in respect of R&Q
Shares

"DI
Holders"
the holders of Depositary Interests

"Expected Net Cash Proceeds"          Purchase Price less debt
commitments of Accredited and subject to adjustments as set out in the
Purchase and Sale Agreement and as summarised in paragraph 6 of this
Announcement

"Form of Instruction"                         the form
of instruction for the DI Holders for use in relation to the Special General
Meeting

"Form of Proxy"
the form of proxy relating to the Special General Meeting

"Group" or "R&Q Group"                    the Company
and each of its Subsidiaries prior to completion of the Sale

"IT"
Information Technology

"Latest Practicable Date"                   12 December 2023
being the latest practicable date prior to the publication of this
Announcement

"London Stock Exchange"                 London Stock Exchange
plc

"MGAs"
Managing General Agents

"Non Executive Directors"                 being Jeffrey
Hayman, Philip Barnes, Eamonn Flanagan, Joanne Fox, Jerome Lande and Robert
Legget

"Notice of Special General Meeting" the notice of the Special General Meeting,
set out in Part VII of the Circular

"Onex"
Onex Corporation

"Purchaser"
Onex Raven Buyer Inc.

"Purchase and Sale Agreement"        the conditional purchase and sale
agreement dated 20 October 2023 between the Purchaser and the Company in
respect of the Sale

"Purchase Price"
$465 million, subject to adjustments as set out in the Purchase and Sale
Agreement

"R&Q
Shares"
the ordinary shares of par value 2 pence each in the capital of R&Q,
including the Depositary Interests in respect of such shares (other than any
such shares that may be Treasury Shares while held by R&Q)

"R&Q Shareholders"
holders of R&Q Shares

"R&Q
Legacy"
the Company and each of its Subsidiaries excluding Accredited

"Registrars"
Computershare Investor Services PLC

"Resolution"
the resolution to be proposed at the Special General Meeting which is set out
in full in the Notice of Special General Meeting

"Sale"
the proposed sale of Randall & Quilter America Holding, Inc to the
Purchaser in accordance with the Purchase and Sale Agreement

"Scopia"
funds advised by Scopia Capital Management, L.P.

"Special General Meeting"                 the general meeting
of the Company, notice of which is set out in Part VII of the Circular and
including any adjournment(s) thereof

"Specified Program Business"          contracts of insurance to which
AIEL is a party (as insurer) which were underwritten or produced by certain
MGAs

"Subsidiary"
with respect to any company, any other company of which fifty percent (50 per
cent.) or more of the outstanding voting securities or ownership interests are
owned or controlled, directly or indirectly, by such first company, by any one
or more of its Subsidiaries, or by such first Company and one or more of its
Subsidiaries

"Transition Services Agreement"       the transition services agreement
between (i) R&Q or an affiliate of R&Q and (ii) the Purchaser or an
affiliate of the Purchaser to be entered into on Closing

"UCA"
programme business underwriting and claims management agreement or its
equivalent under which AIEL delegates authority to underwrite or produce
program business

"UK"
the United Kingdom of Great Britain and Northern Ireland

"USD" or
"$"
United States dollars

 

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