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Corporate Governance Statement

The board of Randall & Quilter Investment Holdings Ltd. (the “Company”) is responsible for the Group’s corporate governance policies and recognises the importance of high standards of integrity. The Company has adopted the Quoted Companies Alliance Code for Small & Mid-sized Quoted Companies 2018 (the “QCA Code”). This statement sets out how we are complying with the 10 principles of the QCA Code.

The Company’s mission is to deliver on our core strategy of providing program underwriting management services to Managing General Agencies and their reinsurers and create finality solutions to owners of discontinued insurance businesses. By focussing on these high growth markets, we will provide our investors with complimentary revenue streams: regular and stable fee income from program business and the capital extraction from managing legacy portfolios. Our mission is underpinned by our strategic objectives. Our business model and strategic plan, and our progress in achieving it, is described in detail in our 2017 Annual Report.

The Group and its core businesses take risks in order to attain rewards in an informed and controlled manner. This translates into having regard to both potential upside and downside risk, in the context of the overall Group strategy, that aims to optimise maximise return on equity and shareholder value within the Group’s defined risk appetite.

The risk strategy is underpinned by a number of core objectives which set the boundaries in order to meet the expectations of capital providers and other stakeholders. The  Company’s strategic objectives are:

  1. To acquire or reinsure run-off insurance companies and portfolios in the United States, United Kingdom and European Union to produce attractive book value growth and cash returns
  2. To develop Accredited Surety & Casualty Company Inc., our A- rated United States carrier, into a fronting platform of choice, generating substantial repeatable fee income
  3. To develop Accredited Insurance (Europe) Limited, our A-rated carrier, into a conduit for niche European and United Kingdom Managing General Agency business to highly rated reinsurers, generating substantial repeatable fee income.

The key challenges that the Company faces in the execution of these objectives include the identification of suitable pipeline opportunities, quality of potential partners, appropriate due diligence and timely capital/fund raising. These matters are continually monitored by the Group’s risk management function which reports regularly to the board via the Group Risk Committee.

Feeback from investors is obtained through direct interaction between the Chairman/CEO and  CFO at semi-annual meetings. The voting record at the Company’s general meetings is monitored and we are pleased that all resolutions have been passed by shareholders. The 2 fundraising transactions that were completed in 2017 enjoyed wide shareholder support. There is regular dialogue through the medium of the Company’s corporate brokers, Numis Securities and Shore Capital, and the Company seeks to take the “pulse” of shareholder expectations and reactions through its retained advisers.  Capital Access Group are also engaged to provide a range of services to the Company with particular focus on developing relationships with smaller investors.

Any investor queries can be submitted to secretariat@rqih.com.

We have listened to our shareholders and we have carefully watched the changing nature and requirement of the global insurance business. From this, we have determined that our focus should be on two core areas that provide strong growth opportunities (program business and managing legacy portfolios) where our reputation, expertise and infrastructure gives us a competitive advantage.

The Company believes that by communicating its strategic and financial objectives on a regular basis (at least annually in the Company’s Annual Report) shareholder expectations can be adequately managed. This is particularly important because the Company’s shareholders do not have uniform objectives; on the one hand, some shareholders seek long term growth in the share price, whilst others put greater emphasis on synergies and growing dividends/distributions.

We are pleased with the level of engagement from our shareholders and the strong relationships that have developed.

The board is aware of the impact that its business activities have on the communities in which the Group’s businesses operate. The Group’s responsibilities to stakeholders including staff, suppliers, customers and wider society are also recognised through the Group’s policies on modern slavery, data protection, whistleblowing and diversity for example. As an insurance business, our key resources are essentially people and capital; the business model recognises the need for access to a skilled employee base, access to skilled intermediaries and a strong capital position.

In 2017 the Company received feedback from several of its investors relating to its policy of distributions to shareholders by way of return of capital. The investors asked the Company to consider replacing this with a dividend policy. After a full review, which included external advice, it was concluded that any change in policy should be made in the interests of the shareholders as a whole and, as the current approach was acceptable to the majority, the capital distribution policy would continue for the foreseeable future.

Other key resources and relationships on which the business relies include regulatory authorities in various jurisdictions and US States, our joint venture partners, our primary bank the Royal Bank of Scotland, A.M. Best and our auditors and external legal advisers to name a few, with whom the Group is in frequent communication.

Internal “town hall” meetings provide the opportunity for the CEO to communicate the Company’s strategy directly with staff, keep them informed of developments and respond to questions. These meetings take place at key points in the Company’s calendar, such as the time of results announcements and in relation to material transactions and other significant developments.

Due to the nature of its businesses the board considers that its impact on the environment is minimal and of low risk. However, it seeks to minimise environmental impact through good practice such as reducing paper wastage, use of electronic communications and reducing business travel by making maximum use of telephone and video conference arrangements.

The Group has a mature risk management function, headed by the Chief Risk Officer, which addresses risk management from both a “top down” and “bottom up” perspective. The Group Risk Committee, a full committee of the board, is chaired by an independent non-executive director. It meets quarterly and provides a report to the board. The Chief Risk Officer also attends the Company’s board meetings. The risk management function maintains detailed risk registers where appropriate at the Group and legal entity level, and there is also a risk appetite framework in place against which adherence is monitored. The risk management function also engages regularly with all the functional areas to ensure that risks and controls are properly assessed and managed.

The Risk Management Report in the 2017 Annual Report provides a detailed explanation of the Company’s risk management including a description of, among other things, what the board does to identify, assess and manage risk.

The board comprises three non-executive directors and three executive directors (click here for the board members). The Chairman of the board, Ken Randall, leads the board in the determination of its strategy and in achieving its objectives. Ken also acts as the Chief Executive overseeing the Group on a day-to-day basis and is not considered to be independent.

The board gives regard to the overall effectiveness of the contribution made by each non-executive director and does not consider a directors’ period of service in isolation to determine their independence.

All of the executive directors work full time for the Company. Directors are expected to attend all meetings of the board and the Committees on which they sit, and to devote sufficient time to the Company’s affairs to enable them to fulfil their duties. In the event that directors are unable to attend a meeting, their comments on papers to be considered at the meeting will be discussed in advance with the Chairman so that their contribution can be included in the wider board discussion.

The Company reports the directors’ attendance at board and committee meetings during each financial year in its annual reports.

The directors’ attendance at board and committee meetings during 2017:

Name Position Board Meetings attended                                 Committee membership
Remuneration & Nominations Audit Group Risk Capital & Investment Considered independent
Kenneth Randall Chairman, Chief Executive 10/10 13/13 No
Alan Quilter Executive director 10/10 11/13 No
Michael Smith Non-executive director 8/10 7/7 5/5 Yes
Alastair Campbell Non-executive director 10/10 7/7 5/5 Yes
Philip Barnes Non-executive director 9/10 7/7 5/5 4/4 Yes
Thomas Booth (resigned 5/1/2018) Executive Director 9/10 4/4 13/13 No

Directors who have been appointed to the Company have been chosen because of the skills and experience they offer. With regard to the non-executive directors this includes extensive experience in the fields of law, accountancy and insurance. Full biographical details of the directors are included in the Our People section of this website. The skills and experience of each of the directors gives them the ability to constructively challenge strategy and to scrutinise performance.

We encourage all directors to keep their skills and knowledge up to date and will provide individual directors with any training they need. All of the directors of the Company will be attending a training day in October 2018 which will cover topics including the role of the director and the board, corporate governance, the Company’s legal and regulatory environment, board structure and functioning. Our policy is to provide training in directors’ roles and responsibilities to all new directors who also receive an induction pack of information relevant to the company to which they are appointed. We have an open and transparent approach to management information, with the Chief Executive providing business updates and insights in his regular report to the board. This ensures that that the directors have a thorough understanding of the Company’s operational activities, the regulatory environment that affects the Group, Group and subsidiary company performance and investor relations. The Company Secretary provides updates during the year on any significant developments in legal, governance and compliance areas.

Non-executive directors meet frequently with management at board and committee meetings. In 2018 they received a formal briefing session with the United States program management team in order to better understand their operational activities; a similar briefing with the Malta management team has been arranged.

The Company has adopted a board diversity policy and will seek to improve the diversity amongst its members, including gender balance, in future appointments.

A board effectiveness review was not conducted in 2017. However, a review will be completed by the end of 2018. The outcomes and principal findings will be reported to the board and disclosed in the next Annual Report. Any improvement actions identified will be progressed in 2018/19. The performance of the board and its committees is key to the Company’s success; the frequency of further evaluations will be determined by the board based on the findings of the 2018 review.

Agreed personal objectives and targets including financial and non-financial metrics are set out each year for the executive directors and performance measured against those metrics.

Succession planning has been a priority for the board over recent years and this has been led by the Remuneration & Nominations Committee. The board has agreed that its succession planning should ensure that board appointments provide an appropriate mix of skills and experience which will support the Group’s objectives of delivering on its core strategy. The Company also recognises the need for succession planning throughout all levels of management and plans for this are well developed.

In January 2018 Mark Langridge was appointed to the board as executive director, bringing varied experience of the London insurance industry which we believe equips him well to make a positive contribution to the continued development of the Group.

We are committed to ensuring high standards of corporate and social responsibility. Our employees are key to the continued success of our business and we actively promote their development and ongoing improvement. We promote diversity in our workforce and wholly support equal opportunities in employment. Our recruitment, training and promotion processes are all done on a non-discriminatory basis.

Our ethical values of fitness and propriety, consistent with our business model, are reflected in our System of Governance and detailed in Group-wide policies including matters such as dignity at work, health and well-being, modern slavery, anti-bribery and whistleblowing. The System of Governance document explains that the Group continues to simplify its business model to promote a completely open culture where we share ideals and are open in passing information up and down through the Group. The Group accepts that the business model only works with a strong “centre” which sets the rules, delegates to the subsidiaries (with boards which include appropriate numbers of group managers and technical specialists) but then operates group-centric governance processes to ensure that systems and philosophy are being consistently adopted throughout the Group.

The Company’s progress with regards to promoting ethical values and a healthy culture is monitored by a team of cross-functional representatives which provides a quarterly report for the board to review. The Company is considering opportunities to develop its corporate and social responsibilities.

Details of the Group’s corporate governance and risk management structures are provided in the Shareholder Information section of this website. There are no matters expressly reserved for the board.

The board considers that the Group’s governance framework is appropriate and in line with its plans for growth. The System of Governance report, which is approved by the board, is submitted to the Bermuda Monetary Authority on an annual basis.

The board recognises the importance of effective communication with its shareholders. The Group maintains communication with institutional investors through individual face-to-face meetings with executive directors, particularly following publication of the Group’s interim and full year results. Private shareholders have the opportunity to attend the Annual General Meeting at which questions can be answered. A range of corporate information (including copies of presentations and announcements, and an overview of activities of the Group) is available on this website. The Group also lists contact details on this website should shareholders wish to communicate with the board, or with its brokers Numis Securities and Shore Capital. Investor relations activity and a summary of the shareholder analysis report is reviewed at quarterly board meetings. More recently, following a significant number of management changes to reflect the strategic changes within the Group, institutional investors have also had the opportunity to meet members of the Group Executive Committee.

Details of the work of the Audit Committee, Remuneration and Nominations Committee, Reinsurance Asset Committee and the Group Risk Committee are set out in pages 26 and 27 of the Company’s 2017 Annual Report.