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Interim results for the 6 months ended 30 June 2019

6 September, 2019

The Board of Randall & Quilter Investment Holdings Ltd. (AIM-RQIH), the specialist non-life Legacy insurance investor and capacity provider to the US and European MGA Business, announces the Group’s interim results for the 6 months ended 30 June 2019.

Financial Highlights

  • Pre tax profit £33.1m (H1 2018 continuing: £7.8m).
  • Earnings per share (basic) 19.2p (H1 2018 continuing: 3.6p).
  • 13% increase in net tangible assets per share to 133.2p (H1 2018: 117.6p).
  • Proposed interim distribution per share of 3.8p (H1 2018: 3.6p).
  • Return on tangible equity 12.5% (H1 2018: 6.8%).
  • Oversubscribed new share issue in March 2019 of £103.5m (after costs and expenses).

Operational Highlights

  • Completed the acquisition of Global Re for $80.5m – our largest ever legacy transaction.
  • Agreed acquisition of Sandell Re for $25m, subject to regulatory approval.  Once completed, this Legacy acquisition will contribute to the 2019 full year result.
  • Completion of five new Legacy acquisitions and three Legacy reinsurances in the half year.
  • Launch of 10 new Program Management contracts in the USA and Europe.
  • Estimated future gross written premium of approaching $800m per annum from program contracts secured to date.
  • Excellent pipeline of new business opportunities in both Legacy and Program Management.
  • New leadership structure announced with Dr Roger Sellek and Alan Quilter (R&Q co-founder) appointed as Joint Group CEOs. Ken Randall continues as Executive Group Chairman.

Commenting on the results for the half year, Ken Randall, Executive Group Chairman said:

“I am pleased to report a set of results reflecting both an outstanding financial performance and continuing  delivery against our strategy.

“The Group has achieved more than a four fold increase in pre- tax profits for continuing operations compared to the same period in 2018.  As expected these excellent results reflect the completion of Legacy deals that were carried over from 2018 – notably the acquisition of GLOBAL U.S. Holdings, Inc. and its subsidiary GLOBAL Reinsurance Corporation of America (“Global Re”) and retro-active reinsurance of Schools Association for Excess Risk (“SAFER”).

“The H1 Results have also been enhanced by a strong investment performance with total income of £16m against only £5.4m for the whole of 2018.

“Our Program Management Business is growing strongly as we continue to expand our relationships with business producers and mainstream reinsurers and we have good visibility of future commission earnings.  The onboarding process for newly agreed programs in Europe is a little slower than we had originally expected, however, the Program segment of our business is expected to move into profit by the middle of 2020 with anticipated strong earnings growth thereafter.

“Our traditional Legacy business continues to thrive with five Legacy acquisitions and three Legacy reinsurances completed in the period.  We are seeing a growing number of larger deal opportunities as the demand for Legacy solutions continues to grow.

“The investment markets were positive in the first half year, enabling us to recover all unrealised losses sustained in the final weeks of 2018.  We continue to invest in high grade securities and the growth in our insurance float (£729m at 30 June 2019 vs £584m a year earlier) should ameliorate some of the impact of declining interest rates over the longer term.

“The investment result for the first half of 2019 was an average yield of 2.3% against just 0.7% at the same stage in 2018.   We have overhauled our investment portfolio by disposing of almost all equity investments, rationalising our third party investment managers and reducing investment management expenses.

“We have announced changes in our leadership team with the recruitment of Dr Roger Sellek, who has joined from A.M. Best, and the promotion of Alan Quilter as Joint Group CEO’s.  I shall continue in the role of Executive Group Chairman.  Freed of day to day operational responsibility, I shall be focusing on the strategic development and expansion of the Group.

“The business continues to perform well with an excellent pipeline of new opportunities in both Legacy and Program Management.  The Board expects that full year results for 2019 will be in line with market expectations and we remain very positive about our medium and long term prospects, which will benefit from the emerging profits from our fast growing Program Management business.

“Whilst the final outcome of Brexit remains unclear, we believe the preparation and plans we have put in place will enable the Group’s European business to continue without material interruption in all likely scenarios, including a ‘no deal’ Brexit. Our large concentration of US dollar revenues and net assets provides a good measure of protection in the event of ongoing sterling weakness.

“Michael Smith has retired from the Board having served as a non-executive Director since the Group’s initial listing on AIM. We wish him a long and healthy retirement and I am personally grateful for his support and wise counsel.”

Click here for the full press release

Interim results for the 6 months ended 30 June 2019

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