Randall & Quilter - H1 Results Update
R&Q's interim results announced the swift transformation of the Legacy Insurance business into one that can manage some $2bn of reserves on behalf of external capital through a new vehicle, Gibson Re. This marks the next (and biggest) step in its transition to a recurring-revenue business, generating a 4.25% annual management fee – management expects it to contribute to growing group EBIT to $90m by 2023. Somewhat overshadowed by this announcement was another stunning performance from Program Management, which grew Gross Operating Income 143% and Pre-Tax Operating Income by 1,170% to $9.9m, on a 40% margin. We expect margins to expand from here as incremental growth requires little additional investment.R&Q remains a leader in both its markets, which in turn are both experiencing strong secular growth trends. Both businesses are poised to enjoy material operating leverage from hereon in, and the reduced capital requirement to grow Legacy Insurance reduces the risk of further dilutive raisings. The market can only ignore this for so long, particularly as dividends grow.
Randall & Quilter Investment Holdings is a holding and investment company. Through its subsidiaries, Co. acts as owners and managers of insurance companies, live and in run-off, as underwriting managers for insurers, as participators and managers of Lloyd's syndicates, as purchasers of insurance receivables and as service providers to the non-life insurance market. Co.'s has 3 segments: insurance investments which acquires and assumes legacy portfolios, insurance debt and provides capital support to Lloyd's syndicates; insurance services which provides insurance related services; and underwriting management, which provides management to Lloyd's syndicates and operates underwriting entities.
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