Strong Program growth, healthy Legacy pipeline
In our detailed note on July 7th that followed the 2019 results we argued that R&Q’s shares were materially undervalued. Trading at a 40% discount to the average rating of industry peers versus NAV, despite superior performance.Three positive announcements this week confirm that the group continues to perform as expected despite the impact of Covid-19, and in line with our forecasts.
First, R&Q reported that its Program Management division added 10 new programs over the 12 months to end June 2020, and closed the period with 36 active programs.. As at end H1 contracted premium was $924.5m (H119: $431.6m) and Gross Written Premium (GWP) $247.2m (H119: $172.9m); respective increases of 114% and 43%.
Subsequent announcements confirmed agreements to acquire, subject to regulatory approval, Inceptum Insurance Co. Ltd. and The World Marine and General Insurance Co. R&Q also confirmed a ‘healthy pipeline of opportunities and further transactions nearing completion’ which it expects to announce over the next few weeks.
Deals, trading updates and confidence as to further activity have all been recently reported by R&Q, supporting both our forecasts and view that the company’s growth opportunity is being substantially underestimated by the stock-market.
Gallagher (Arthur J.) is a holding company. Through its subsidiaries, the company provides insurance brokerage, consulting and third party claims settlement and administration services to both domestic and international entities. The company's segments are: brokerage, which is primarily comprised of its retail and wholesale insurance brokerage operations; risk management, which provides contract claim settlement and administration services for enterprises and public entities that choose to self-insure their property/casualty coverages and for underwriting enterprises that choose to outsource their property/casualty claims departments; and corporate, which manages its clean energy and other investments.
Brown & Brown is an insurance agency, wholesale brokerage, insurance programs and service organization. The company's segments are: Retail, which provides a range of insurance products and services, and non-insurance risk-mitigating products; National Programs, which provides professional liability and related package products, a range of insurance products, and flood coverage, and targeted products and services; Wholesale Brokerage, which markets and sells excess and surplus commercial and personal lines insurance; and Services, which provides insurance-related services, including third-party claims administration and medical utilization management services, as well as Medicare Set-aside services.
Marsh & McLennan Companies is a holding company. Through its subsidiaries, the company provides clients advice and solutions in risk, strategy and people. The company provides analysis, advice and transactional capabilities to clients. The company conducts business through two segments: Risk and Insurance Services, which includes risk management activities (risk advice, risk transfer and risk control and mitigation solutions) as well as insurance and reinsurance broking and services; and Consulting, which includes health, wealth and career services and products, and other management, economic and brand consulting services.
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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