The insurer has six weeks to repay a loan to Qatar Re
Markerstudy is seeking new investment as it seeks to deliver its acquisition of CIS Insurance and meet loan repayment to long-term partner Qatar Re.
The group obtained loans totalling £217.3m from Qatar Re - half has to be paid back by December 1 and the remainder on March 31 next year, plus interest of £24.2m.
The MGA is exploring all options including a loan, raising fresh equity through new investors and a potential sale of one its companies.
Gibraltar-based Markerstudy remains confident that its debt level is well in check, the repayment has been factored into its strategy and it is ”business as usual” in all its business relationships.
It comes against a backdrop of the firm continuing to work to get its potential acquisition of the Co-operative Society’s general insurance company through the PRA authorisation process
The company insisted to Insurance Times the loan repayment had “been factored into our strategy”.
Details of Markerstudy finances
In its full year statement to Companies House posted on 18 September this year the directors of Markerstudy Insurance Services Limited (MISL) said while cashflow is positive, the rescheduled payments are “in excess if the MSIL group’s cash flow”.
Auditor RSM UK highlighted the issues around the group’s ability to continue as a going concern in its part of the financial statement.
“The group has net assets of £6.6m at 31 December 2018 which include debtor balances of £310.9m due from Markerstudy Group companies so will rely on the ongoing support of the parent company to continue to trade and meet its liabilities as they fall due,” it said.
In the note within the statement around the status as a going concern MISL said: “The Markerstudy Group and the company have amounts by the way of loans owing to Qatar Re of £217.3m along with the interest due on these loans that is forecasted to total £24.4m.”
It added: “The directors of MISL have forecasted that the MISL group and the company will generate positive cash flow, but the rescheduled repayments are in excess of the MISL group’s expected cash flow.
“Markerstudy Holdings have provided a letter of support confirming that it will provide financial support to the company such that it will continue to be able to meet its obligations as they for due for a period of at least 18 months from 30 August 2019.
“The Markerstudy Group directors are currently seeking new third-party investors or lenders to provide the Markerstudy Group with long term preferential debt and equity funding to enable the Markerstudy Group to repay group balances due and then subsequently enable both the Markerstudy Group and MISL group to meet both its 1 December 2019 and 31 March 2020 loan repayment to Qatar Re. The directors are confident they will obtain the funding required.”
The group said there were other ways they could explore to raise the necessary funds via asset sales that could include the sale of a business within the Markerstudy Group.
’Business as usual’
A spokesman told Insurance Times: “We can assure the market and our clients and customers that this is business as usual, and the loan repayment to Qatar Re has been factored into our strategy. Compared to many of our contemporaries, our debt ratio is small, and it’s standard for companies to carry debt and, from time to time, re-finance and we have, as you would expect, various options to settle this matter.
“With Qatar Re we have a ten-year strategic alliance, and an exceptionally good relationship, and they are fully informed of our plans. However, at this stage, we are unable to share further information until we have concluded our discussions.”
It comes against the backdrop of the firm’s continued wait for approval from the PRA of its acquisition of the Co-operative Society’s non-life insurance operation, CIS General insurance.
The parties announced they had reached agreement on the terms of the sale in February but as of yet the PRA has yet to issue its authorisation for the deal to be completed.
When approached by Insurance Times with regards to when a decision would be made by the regulator, a PRA spokesman said it is not the regulator’s policy to comment on PRA-regulated firms.
Markerstudy told Insurance Times: “We can confirm the Co-op deal is awaiting regulatory approval and all parties continue to work effectively to conclude the deal.”
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