Joint venture to acquire legacy liabilitiesSource: RNS
R&Q Insurance Holdings Ltd
R&Q invests in Joint Venture to acquire legacy liabilities of MSA Safety
6 January 2023
R&Q Insurance Holdings Ltd. ("R&Q") and Obra Capital, Inc. ("Obra") are pleased to announce that they have acquired, through a newly formed joint venture, a wholly owned subsidiary of global safety equipment manufacturer MSA Safety Incorporated ("MSA Safety").
The acquired subsidiary (the "Company") holds legacy product liability claims relating to coal dust, asbestos, silica, and other exposures. MSA Safety contributed approximately $341 million in cash to the Company, in addition to related insurance assets, and the joint venture contributed $35 million.
As a result of the transaction, R&Q will provide claims and management services and Obra (recently rebranded from Vida Capital) will provide investment management services to the Company. The transaction has enabled MSA Safety to remove all legacy cumulative trauma product liability reserves, related insurance assets, and associated deferred tax assets of the divested subsidiary from its balance sheet.
As the transaction concerns non-insurance legacy liabilities, it will not be ceded to Gibson Re. The structure of the joint venture and the related exposures in this transaction result in reduced counterparty credit risk for R&Q, and therefore means that the fees will be lower than those earned from Gibson Re.
William Spiegel, R&Q's Executive Chairman said: "We are pleased to form a joint venture with Obra to acquire and professionally manage these legacy liabilities, providing MSA Safety with a complete finality solution. This is an exciting transaction for R&Q, showcasing the capabilities, reputation and innovation of our Legacy Insurance business. This will see our reserves and non-insurance liabilities under management increase to over $1 billion, comprising two pools: traditional insurance reserves via Gibson Re, and non-insurance legacy liabilities. This furthers our strategy of becoming a leading manager of legacy liabilities and reflects our ability to execute transactions that match different legacy liabilities with the right form of capital."
Andrew Pinkes, R&Q's Chief Executive Officer of Legacy Insurance said: "While we have been providing Legacy Insurance solutions to insurers, reinsurers and corporate captives for decades, this transaction opens up a new growth avenue in providing similar services for non-insurance, corporate liabilities. This transaction is a strong demonstration of R&Q's expertise in underwriting and managing long-tailed liabilities, as well as our innovative approach to structuring and delivering comprehensive finality solutions."
Notes to Editors:
R&Q is a global non-life specialty insurance company. We operate two core, highly complementary, businesses: Program Management and Legacy Insurance. Both these businesses are leaders in their respective markets.
Our approach is to deploy our origination and underwriting capabilities, alongside our licensed and rated carriers in the US, EU and the UK, to generate attractive fee returns in Program Management and Legacy Insurance.
Legal Entity Identifier (LEI): 2138006K1U38QCGLFC94
Obra is an investment firm specializing in insurance special situations, structured credit, asset-based finance, and longevity with $3.9 billion in assets under management. The firm aims to generate long term value and attractive returns for investors across closed-end and open-end funds. With capabilities in investing, originating, structuring, and servicing, Obra provides differentiated investment opportunities and capital solutions for investors globally. For more information, please go to www.obra.com.