RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022

Strong growth in Accredited offset by Legacy adverse development

R&Q Insurance Holdings Ltd (AIM: RQIH) ("R&Q" or the "Group"), the leading non-life global specialty insurance company focusing on the Program Management ("Accredited") and Legacy Insurance ("R&Q Legacy") businesses, today announces its results for the year ended 31 December 2022.

Strategic and Governance Update

• Completed the legal separation of Accredited and R&Q Legacy and announced exploration of strategic
  transactions with third parties as part of the separation
• Recognition by A.M. Best of Accredited as an independent rating unit, with an A- financial strength rating
• Completed sale of minority stake in Tradesman Program Managers for $47 million at 10x adjusted EBITDA and 3.7x initial investment
• Raised $50m of preferred equity from Scopia Capital, with the opportunity to raise an additional $10 million to increase the capital resources of R&Q Legacy
• Appointed Jeff Hayman as our Independent Non-Executive Chairman

2022 Financial Highlights

Accredited

• Gross Written Premium of $1.8 billion (2021: $1.0 billion, a 76% increase)
• Fee Income (excluding MGA stakes) of $80.0 million (2021: $44.9 million, a 78% increase)
• Pre-Tax Operating Profit of $55.7 million (2021: $20.6 million, a 170% increase)
• Pre-Tax Operating Profit Margin of 56.8% (2021: 35.7%, a 21.1 percentage point increase)

R&Q Legacy

• Completed four transactions while exercising discipline in a soft market with Gross Reserves Acquired of
  $68.8 million (2021: $735.0 million)
• Reserves Under Management of $395.6 million at year-end, which has increased to over $1 billion with MSA Safety transaction involving non-insurance liabilities that closed in January 2023 (2021: $417.0 million)
• Fee Income of $12.1 million (2021: $0 million)
• Pre-Tax Operating Loss of $56.6 million, which includes $32.0 million of adverse development primarily from older transactions. The loss, excluding adverse development, reflects the first full year of a transition to a capital efficient annual recurring, fee-based revenue model from a balance sheet intensive, Day-1 gain model

Group

• Total Fee Income (excluding MGA stakes) of $92.0 million (2021: $44.9 million, a 105% increase)
• Pre-Tax Operating Loss of $33.3 million impacted by $32.0 million of adverse development and the transition to a fee-based revenue model at R&Q Legacy

Non-Recurring Items

• Significant non-recurring items:
  • Non-cash charges of c.$205 million primarily associated with:
  • Unrealised and realised non-economic net investment losses of $135.8 million; $18 million of realised losses arising primarily from rebalancing the portfolio for higher returns
  • $43 million of non-cash adverse development associated with a non-core subsidiary, that will become a discontinued operation in Q1 2023 at which time such charges will be reversed
  • Unearned program fee income of $17.0 million in which cash has already been received
  • Net intangible amortisation of past legacy acquisitions of $9.6 million
• Extraordinary one-off cash charges of c.$50 million primarily associated with:
  • $28 million in one-off historic legal matters associated with older legacy transactions and
    discontinued programs
  • $14 million in automation spend which should yield meaningful productivity savings starting in 2024
  • $8 million in advisory costs associated with shareholder activism and sale process

Operational Highlights

• Continued focus on cost control with Fixed Operating Expenses decreasing 13% year-over-year
• Operational improvement program underway with c. $15 million of the total $20 ‒ 25 million investment
  deployed since 2021, with the remainder to be incurred in 2023
• Investment in automation and technology processes is expected to generate approximately $10 million of recurring annual cost efficiencies by 2024

Outlook

• Focus remains on the separation of R&Q Legacy and Accredited
• Accredited and R&Q Legacy both with excellent pipelines

William Spiegel, Chief Executive Officer of R&Q, commented:

"2022 was, without doubt, an eventful year for R&Q. I would like to start by thanking our shareholders and partners for their support and our employees for their focus and commitment. During the year we saw substantial progress with regards to our Five-Pillar Strategy, which includes significant investment and change aimed at making R&Q a more modern and efficient company with a stronger culture. In many ways the changes we are making represent a multiyear operational turnaround at R&Q and, although not always easy, they will make us a stronger, more sustainable and more effective business.

"While our Pre-Tax Operating Loss of $33.3 million is driven primarily by $32 million of adverse development in R&Q Legacy, at an underlying level our performance reflects two businesses at different stages of their development. Accredited continued to grow and reported record results while R&Q Legacy reported a loss but has shown good execution against its transition plan to become a more capital efficient business.

"We announced in April 2023 that the Board had concluded that it was in shareholders' best interests to evaluate strategic options that allowed for a separation of Accredited and R&Q Legacy. We have two great businesses, but they operate in different parts of the insurance ecosystem, require different skillsets and expertise, and have different rating and regulatory needs. We are now in a position where each has the scale, maturity, and brand strength to stand on its own. By separating these businesses, we can ensure both have the right level of management focus and appropriate capital structures to achieve their full potential.

"Looking ahead, we are confident the outlook is strong for Accredited and R&Q Legacy. Both businesses have
excellent pipelines and, while we remain highly disciplined, we are confident of growing Gross Written Premium and Reserves Under Management in each business respectively."

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