Randall & Quilter (RQIH) spent much of last year adjusting the business to focus on two core operations: legacy acquisitions and programme underwriting management. This included selling its Lloyd’s managing agency for £11.8m, which boosted headline profits. And in January, after the year-end, it sold its Insurance Services and Captive Management operations for a net £18.6m.
On the legacy acquisition side, where R&Q buys insurance books that are no longer underwriting new business, a total of 19 legacy deals were completed, and there is an extensive pipeline of opportunities. Some of these have been generated because of increased capital requirements and reporting obligations arising with the implementation of Solvency II regulations, while other businesses decide to sell books in run-off to raise capital.
As well as being licenced in the US, R&Q also has a foothold in mainland Europe through its R&Q Insurance operation in Malta. This is the second part of the core operation known as programme underwriting management. Essentially, R&Q is approached by managing agents and earns a fee by underwriting business and then reinsuring it. Of these so-called programme partnerships, three were signed in Europe and five in the US, and a further six in each region are expected to be secured in 2018.
Analysts at Numis are forecasting adjusted pre-tax profits for the year to December 2018 of £19.9m and EPS of 13.4p (from £23.5m and 25.4p in 2017).
| RANDALL & QUILTER (RQIH) | ||||
| ORD PRICE: | 160p | MARKET VALUE: | £201m | |
| TOUCH: | 158-162p | 12-MONTH HIGH: | 162p | LOW: 129p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 132p | NET CASH: | £173m | |
| Year to 31 Dec | Gross premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 9.1 | 11.3 | 11.9 | 8.4 |
| 2014 | 24.8 | -2.3 | -6.3 | 8.4 |
| 2015 | 29.3 | 2.8 | 4.2 | 8.4 |
| 2016 (restated) | 53.4 | 6.4 | 9.9 | 8.6 |
| 2017 | 187.9 | 9.8 | 10.5** | 8.9 |
| % change | +252 | +53 | +6 | +3 |
| Ex-div: | * | |||
| Payment: | * | |||
*Dividend paid via the issue and repurchase of shares. Final distribution of 5.4p payable on or around 18 Jun **On continuing operations | ||||
