Phoenix Asset Management co-founder lands more body shots at R&Q’s William Spiegel


Another R&Q investor has entered the race against embattled executive chairman and director William Spiegel.

An open letter posted on Phoenix Asset Management’s website by Gary Channon, the company’s co-founder and CIO, dealt another blow to Spiegel’s tenure, which is up for vote at a special board meeting on May 13. september. A cross section of R&Q shareholders have called on Spiegel to step down, with former founder and executive chairman Ken Randall returning.

In his letter, Channon says Spiegel “lacks” in three categories of shortcomings: competence, alignment and integrity.

Channon said the business was ‘not competently run’, writing: ‘From our first dealings with him, we realized he struggled to intelligently allocate capital at the corporate level. He was unable to assess the impact of the dilutive capital increase he had just imposed on us. He didn’t understand that he needed to understand the value of what he was giving up, not just the return on the capital he was raising. We have other examples and have collected through our research monitoring process other anecdotal evidence of someone who does not quite understand the details.

He added: “The underlying point however is that R&Q is not being run competently, this is known internally and by key stakeholders and it is hurting the business which will ultimately have adverse consequences.”

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He continued: “An example of misalignment is the action of management during this latest saga. We had learned that Brickell’s initial offer for the company was £2.20. The offer was accepted and the next day William revealed to the bidder that the company would post a pre-tax loss of 160 million and needed more than 100 million in emergency funds in order to avoid breaches of the covenants. financial and rating downgrades. We can only assume that Brickell didn’t take this lightly and, from what we observed, began to adopt a much more defensive posture to help the company prevent further damage. Surprisingly, at the time the Brickell deal was signed, we believe the executives handed themselves over $6 million in bonuses that were not explicitly disclosed to Brickell.

Channon then questioned Spiegel’s integrity, writing, “The final factor is integrity, the quality of being honest. Essential in any company we invest in, but incredibly important in commercial type R&Q which is very opaque and where we have to rely on directors’ communication to make our judgments. The weakest form of integrity in our rating is someone who won’t lie to you but is willing to let you form the wrong opinion without correcting you. We don’t find William even reaching that level.

This latest letter follows the announcement this week that R&Q is to hold a special general meeting for its board of directors to vote on Phoenix’s proposals to remove William Spiegel as executive chairman and director of the society.

The move came after weeks when separate sides either confirmed Spiegel’s performance or took on him. Phoenix has led the charge against Spiegel, with R&Q confirming in a statement that this resolution is shared by Brickell, 777 Partners, 777 Asset Management, and others.

The uproar began mid-month when Phoenix Asset Management Partners, which owns about 12% of the company’s share capital, said in an open letter that it wanted Spiegel removed along with Randall to take his role.

In the latter, Channon wrote that there was no “formal or informal agreement” between Phoenix and Brickell or Randall regarding any matters regarding R&Q.

He added: “William and the board have tried to paint this as a William Spiegel versus Ken Randall saga. That couldn’t be further from the truth. The requirement is to remove an officer who harms the company and does not act faithfully and in the best interests of shareholders. Ken Randall was simply hired because he is a trusted and very capable former gatekeeper to the company and, in our opinion, the perfect interim steward.

However, other companies with R&Q shares came to Spiegel’s defense.

Thomas Moore, senior investment manager for UK and European equities at abrdn, said: “abrdn PLC manages funds holding approximately 6.2% of the outstanding shares of R&Q Insurance Holdings Ltd. We support the current Executive Chairman, William Spiegel, and believe the strategy outlined is appropriate for realizing the full shareholder value inherent in the Legacy and Program Management divisions.

He added: “We have not seen a valid argument to justify the distraction that would come from a change in management, and believe that the stability of Spiegel’s leadership is particularly important after a year of change.”

The Scottish firm was not the only one to declare itself in favor of Spiegel. Investment firm Vida Capital, which manages 9.07% of the company’s outstanding shares, expressed support for the company’s current leadership and strategy.

In a statement, the company, which is a vertically integrated, uncorrelated investment firm specializing in insurance, longevity, structured credit and private lending, said it was supporting Spiegel, the management team and the board of directors in their efforts to maximize shareholder value.

He added: “We believe that a dramatic change in strategy or executive direction at this time would be counterproductive and create a major distraction for the business.”

Spiegel was named executive chairman in April 2021 upon Randall’s retirement. The specialist in the acquisition and management of legacy and non-life run-off, program services and investments had been planning his succession, with the decision previously announced in July 2020.

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