Shares in Randall & Quilter fell 5 per cent after the specialist insurer reported a pre-tax loss for last year. However, add back £13.5m of impairment charges and adjusted pre-tax profits rose 17 per cent to £8.8m. Moreover, the dividend was raised 10 per cent and the shares retain their attraction as an income play, underpinned by a yield of 7.6 per cent.
First-half profits were held back by the cost of taking on new teams and Solvency 11 compliance costs, but second-half trading was stronger. This was spearheaded by the company's insurance investment division, where profits rose 12 per cent to £8.3m and benefited from a £3.9m increase in releases from net reserves as a result of lower claims.
On the underwriting side, Syndicate 1897 reported a £6m loss as a result of subdued premiums, which restricted new business, and higher claims including the KS Endeavour rig explosion offshore Nigeria. However, R&Q's £500,000 share of those losses was more than offset by a £2.2m profit from the 20 per cent stake in Syndicate 102. Investment income fell from £8.5m to £6.4m, mainly as a result of lower average fund balances held.
Numis is forecasting 2012 pre-tax profits of £9.2m, EPS of 13.4p and a dividend of 8.5p.
| RANDALL & QUILTER (RQIH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 107p | MARKET VALUE: | £53m | |
| TOUCH: | 106-107p | 12-MONTH HIGH: | 130p | LOW: 91p |
| DIVIDEND YIELD: | 7.6% | PE RATIO: | NA | |
| NET ASSET VALUE: | 137p* | |||
| Year to 31 Dec | Gross premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 1.46 | 7.03 | 29.5 | nil |
| 2008 | 0.64 | 8.76 | 10.8 | 7.00 |
| 2009 | 0.67 | 0.26 | -0.3 | 7.00 |
| 2010 | 0.95 | 7.52 | 12.2 | 7.35 |
| 2011 | 2.29 | -4.66 | -0.9 | 8.10** |
| % change | +142 | - | - | +10 |
Ex-div: TBA Payment: TBA *Includes intangible assets of £14.5m, or 29p a share **Final dividend of 4.9p a share payable through a share scheme to be announced shortly | ||||
