R&Q Insurance Holdings Ltd (AIM:RQIH) shares fell 10% to 60p on Tuesday morning after the company said it expects to make a US$30-40mln loss for the past year and proposes spinning off Accredited, its program management business.
R&Q, which changed its name from Randall & Quilter Investment Holdings last year, said that given the size that Accredited has grown to, with gross written premium of US$1.8bn and fee income of US$80mln, it believes it is in the best interests of shareholders "for Accredited to stand on its own".
The group board is now reviewing strategic alternatives to separate Accredited and the Legacy Insurance arm, which it said is expected to set each on a "more favourable footing to deliver profitable growth, each with their own appropriate capital structures".
For the past calendar year, Accredited is expected to have made a US$55-60mln pre-tax operating profit, with a loss of US$55-60mln for Legacy Insurance, with a further loss of around US$35mln primarily from interest costs.