An insurance regulator’s review could impact R&Q Insurance Holdings Ltd’s ability to complete the sale of legacy business, the company has disclosed.

The board of directors reiterated that a successful sale represents “the best outcome for all stakeholders, including enabling R&Q to undertake a material financial deleveraging to support the strategy of transitioning the legacy business to a capital efficient and stable recurring fee-based business model.”

The company is separating its legacy insurance business, R&Q Legacy, from its programme management business, Accredited.

They have 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.

The transaction involved 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 would result in a fundamental change of the company’s business and therefore required the approval of shareholders, to be sought at a special general meeting scheduled for January 11 in London.

R&Q said that although the review by the BMA, as the group’s principal insurance regulator, will have a short term impact on the plan, the company’s board of directors remain “firmly committed to the legacy plan”.

A company statement on Friday said: “R&Q has, over recent months, engaged closely with the BMA regarding the future strategy for R&Q Legacy, given the proposed sale of Accredited.

“As part of these discussions the BMA has requested an independent actuarial review of the required reserves of the remaining group post the sale, its capital and its cashflow projections.

“The BMA has now notified R&Q that it will need to:

• pause the redemption of the Tier 2 US$20 million floating rate subordinated notes issued by R&Q Re (Bermuda) Limited, which are treated as Tier 2 capital for solvency due on December 22, 2023. Accordingly, the Bermuda Subordinated Notes remain outstanding on their terms and R&Q Re (Bermuda) will continue to pay interest on such notes as it accrues.

• put on hold the approval of any new external legacy transactions to R&Q Re (Bermuda) while the BMA undertakes its review of R&Q Legacy. This includes the UK Motor loss portfolio transfer announced 26 October 2023.“