4 September, 2017
The Board of Randall & Quilter (AIM:RQIH), the specialist non-life legacy insurance investor and capacity provider of US and European MGA business, announces the Group’s interim results for the 6 months ended 30 June 2017.
• H1 result significantly ahead of equivalent period in 2016. Pre-tax profit of £5.4m (H1 2016: £1.2m) and a tax credit of £0.5m, generating an EPS of 7.9p (H1 2016: 1.5p)
• Record contribution from legacy transactions completed in the first half year of £19.1m (2016: £2.7m), of which £12.7m arose from premiums in excess of undiscounted reserves assumed and £6.4m (2016: £2.7m) from goodwill on bargain purchase
• Excellent progress in deploying funds raised in the placing announced with the full year 2016 results. Additional capital has been injected into R&Q Insurance Malta and Accredited. Funds raised to pursue legacy transactions have already supported deals with others being finalised
• Positive movements in the Group’s existing run-off portfolios with net reserve releases of £5.0m (H1 2016: £6.2m), aided by commutation activity in the US and favourable development in certain captive accounts
• An investment return of 1.4% on the Group’s ‘free’ assets (H1 2016: 2.1%), due to favourable credit markets and rising yields on a predominantly US dollar based portfolio
• Proposed interim distribution per share increased to 3.5p (2016 3.4p) payable on or around October 11 , 2017
• Strong performance in the Group’s principal carriers, R&Q Re Bermuda, Accredited and R&Q Insurance Malta, driven primarily by legacy loss portfolio transfer activity
• Continued growth in the underwriting of MGA/programme business, both in the US using Accredited, and more recently, in the UK and EU, using R&Q Insurance Malta. Two new accounts have been launched from each carrier respectively during the period. Underwriting risk is primarily ceded to highly rated reinsurers.
• Improving results from the s.1991 live syndicate participations as the account gains scale and benefits from favourable recent claims experience. Preliminary estimates of the impact on the Group’s participation of the flooding and wind storm related losses from Hurricane Harvey appear to be modest net of reinsurance and annual CAT loss provisions. The syndicate purchases significant reinsurance protection which means that any potential deterioration of this estimate is not expected to have a material impact on the Group
• Solid results from core UK insurance services offset by weaker results in the US due to continued investment in developing the US healthcare and legacy operations
• Good progress with the disposal programme, aimed at simplifying the business through focusing on the Group’s core activities of legacy and underwriting niche programme business on behalf of high quality reinsurers:
– Lloyd’s managing agency sold to Coverys for $22.6m, a gain of £12.6m over carrying value, subject to regulatory approval; and
– Norwegian insurance manager, Triton sold during the period
• Book value per share excluding goodwill broadly flat at 106.5p (Dec 2016: 107.4p), after a substantial final distribution of 5.1p. This was a result of profitable trading, offset by unfavourable currency movements following strengthening of the pound against the US dollar during the period
Ken Randall Chairman and Chief Executive Officer commented: “I am pleased to report that the Group delivered a very strong performance during the first half of the year. It is the Board’s view, especially given the advanced state of a number of other legacy transactions and the growing pipeline that the results for the full year will be at least in line with expectations, absent unforeseen circumstances.
“The outlook for the Group beyond the current year remains very promising. In the period, we have continued to simplify the business and announced the disposals of our Lloyd’s Managing Agency business, subject to regulatory approval, as well as our insurance manager, Triton in Norway.
“We have established and developed high quality and fully licensed platforms in multiple regulatory jurisdictions while retaining our entrepreneurial and innovative culture. We have widened our distribution network of brokers with the recent fundraising increasing the attractiveness of R&Q Insurance Malta and Accredited.
“Our planned focus on legacy acquisitions and the use of Accredited and R&Q Insurance Malta as conduits for niche programme business to highly rated reinsurers looks increasingly well placed. There are good growth opportunities in both of these core operations and the Group’s strong and growing market position is being driven by our central tenets of expertise and innovation.”
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