Bermudian-based R&Q Insurance Holdings Ltd is to sell Accredited, its programme management business, to funds advised by Toronto-based Onex Corporation for $465 million.

The company announced in April that it was undertaking a strategic initiative to separate Accredited from its legacy insurance business, R&Q Legacy.

R&Q said it has now entered into a conditional agreement to sell 100 per cent of the equity interest in Randall & Quilter America Holding Inc, the holding company of Accredited.

Closing of the sale is conditional on R&Q shareholder approval, regulatory approval and customary consent from certain R&Q debt providers.

Closing of the sale is expected to occur in late Q1 2024 or early Q2.

R&Q said the proposed sale represents an expected equity value of approximately $438 million, with net cash proceeds expected to be approximately $300 million.

It said the net cash proceeds available for utilisation immediately on closing are expected to be between approximately $170 million and $210 million, which will be entirely used to facilitate a material deleveraging of R&Q.

The company said the sale is conditional on the transfer of R&Q's chief executive, William Spiegel, and chief financial officer, Thomas Solomon, to Accredited upon closing.

Upon closing, group non-executive chairman Jeff Hayman will act as chairman and interim CEO of R&Q. The board will initiate a search to appoint a new CEO for R&Q at the appropriate time.

Also upon closing, Paul Bradbrook, the chief accounting officer of R&Q, will become its chief financial officer and a member of the board of directors.

R&Q said its non-executive directors unanimously support the sale and strongly encourage shareholders to vote in favour of the resolution to approve the sale at a special general meeting, which is expected to take place before the end of the year.

The board is of the view that the present financial leverage of R&Q is unsustainable. The sale must proceed to make the net cash proceeds available to facilitate a material deleveraging of the company.

If not, R&Q may not be able to continue to satisfy or obtain waivers on the covenant requirements for its existing debt facilities or repay certain of its debt facilities as they become due.

The company said the sale refocuses R&Q as a legacy insurance business in Bermuda, Europe, the United States and Britain.

Mr Hayman said: "The non-executive directors unanimously recommend the sale of Accredited to Onex. We believe this transaction represents the best possible outcome for R&Q's stakeholders, enabling R&Q to realise value for a business we have grown from a standing start in 2017 while allowing Accredited to maintain its essential independent financial strength rating of 'A-' under new ownership.

“Onex has an extensive track record of successfully investing in businesses across the insurance value chain, making them the ideal partner for Accredited to continue its growth trajectory as a leading transatlantic programme manager.”

Adam Cobourn, managing director of Onex Partners, said: "We are pleased to have the opportunity to establish Accredited as an independent, market-leading programme management platform.

“Accredited has all the ingredients for success as a hybrid carrier, including a talented management team, a well-diversified and high-quality book of business, strong reinsurer relationships and robust underwriting and risk management protocols. It will be well positioned for responsible growth with a strong balance sheet and backing from Onex Partners.

“Investing in the insurance industry has been a core strength for Onex for many years. We look forward to supporting Accredited's management team in this next phase of growth."