Weaker-than-expected premium development and a £1.5m gain on the acquisition of Alma Insurance, which was restated as a prior-year adjustment, depressed profits for Aim-listed insurance conglomerate Randall & Quilter (RQIH). But a number of steps taken to streamline the whole operation, together with a near doubling of capacity to £150m at its Lloyd's insurance vehicle Syndicate 1991, should in time boost the group's earned premium income.
Crucially, the income stream from the acquisition and management of claims against insolvent insurance companies rose sharply - from £600,000 to £4.4m. This was partly of a move to fair-value accounting and partly of a court ruling on the final closure of the Integrity Estate portfolio, a major creditor, which helped boost the aggregate carrying value of the business from £6.6m to £16m. Moreover, with a significant proportion of the current portfolio in run-off this year, group cash flow is expected to improve significantly.
Set against this, investment income fell from £12.6m to £7.8m, as the tapering of bond purchases in the US weighed on credit markets. This still represented a respectable return of 3.6 per cent, though - better than that achieved by most insurers.
Analysts at Shore Capital expect pre-tax profits of £8.4m this year, keeping net tangible assets steady at 117p per share (116p from December 2013).
| RANDALL & QUILTER (RQIH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 132p | MARKET VALUE: | £94m | |
| TOUCH: | 130-133p | 12-MONTH HIGH: | 181p | LOW: 121p |
| DIVIDEND YIELD: | 6.4% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 141p* | |||
| Year to 31 Dec | Gross premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 0.7 | 0.3 | -0.3 | 7 |
| 2010 | 1.0 | 7.5 | 12.2 | 7.35 |
| 2011 | 2.3 | -4.7 | -0.9 | 8.1 |
| 2012 | 6.2 | 16.8 | 22.4 | 8.4 |
| 2013 | 9.1 | 11.3 | 11.9 | 8.4 |
| % change | +48 | -33 | -47 | - |
Ex-div: tba Payment: tba *Includes intangible assets of £17.2m, or 24p a share | ||||
