Insurance services specialist Randall & Quilter (RQIH) moved into the red after a strong performance at its investments arm was offset by losses in the underwriting management business and a weaker outcome from the services division.
But that's not so worrying. The 40 per cent fall in operating profit at the services arm to £3.8m, for example, was largely due to the absence of last year's exceptional boost from writebacks in the US. Management says the division’s UK claims and reinsurance management services business, like its UK broker services operation, has actually performed well. Meanwhile, an increase in legal expense reserves largely explains the £0.7m loss at the underwriting management arm, which earns fees for underwriting business at Lloyd’s on behalf of third parties. Management reckons the performance here still reflects the costs of building scale - a process that should receive a boost from the proposed acquisition of US operation Accredited.
In contrast, the investment arm, which buys and runs down insurance assets, doubled operating profit to £1.6m. Management says its long-term performance will benefit from a decent pipeline of legacy assets. That’s significantly due to so called ‘captives’ - where companies establish internal insurance operations to cover liabilities - being put up for sale.
Numis Securities expects full-year EPS of 9.1p, from 10.4p in 2013, and year-end net tangible assets (NTA) of 118p a share.
| RANDALL & QUILTER INVESTMENT HOLDINGS (RQIH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 152p | MARKET VALUE: | £109m | |
| TOUCH: | 150-154p | 12-MONTH HIGH: | 175p | LOW: 127p |
| DIVIDEND YIELD: | 5.5% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 133p* | |||
| Half-year to 30 Jun | Gross premiums (£m) | Pretax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 4.2 | 4.1 | 4.0 | 3.4 |
| 2014 | 16.8 | -0.9 | -0.9 | 3.4 |
| % change | +300 | - | - | - |
Ex-div: tba Payment: tba *Includes intangible assets of £16.9m or 24p a share | ||||
