Randall & Quilter Investment Holdings Ltd. (AIM: RQIH) (“R&Q” or the “Group”), the leading non-life global specialty insurance company focusing on the Program Management and Legacy Insurance businesses, today announces its audited results for the year ended 31 December 2021.
Strategic Update
- Shareholders did not approve the proposed cash acquisition of R&Q at 175 pence per share, which included $100 million of committed capital for R&Q
- R&Q is now focussed on raising at least $100 million via a placing and up to $8 million via an open offer (the “Fundraise”), which will be announced today
FY 2021 Financial Highlights
Program Management
- Gross Written Premium of $1.0 billion (2020: $539 million, a 92% increase)
- Fee Income of $56.1 million (2020: $24.1 million, a 133% increase)
- Pre-Tax Operating Profit of $20.6 million (2020: $3.4 million, a 506% increase)
- Pre-Tax Operating Profit Margin of 35.7% (2020: 14.3%, a 21.4 percentage point increase)
Legacy Insurance
- Completed 15 transactions with Gross Reserves Acquired of $735 million
- Reserves Under Management of $417 million
- Fee Income of 4.25% or $17.7 million beginning in 2022 as legacy transactions ceded to Gibson Re were concluded at year-end 2021
- Pre-Tax Operating Loss of $5.7 million due to $29 million of adverse development and transformation from upfront ‘Day-One’ Underwriting Income to annual recurring Fee-Income
Group
- Pre-Tax Operating Loss of $21.0 million results impacted by:
- Legacy Insurance business model transformation
- $29 million of adverse reserve development
- IFRS Loss of $127.4 million; results primarily impacted by a ~$90 million pre-tax, non-cash charge
- A final dividend for FY 2021 will not be declared; from FY 2022 onwards, the dividend strategy will be to payout 25-50% of Pre-Tax Operating Profit
Outlook
- Program Management expected to achieve $1.75 billion of Gross Written Premium in 2022
- Q1 2022 Gross Written Premium of $370 million; 92% year-over-year growth
- 76 programs at 31 March 2022 (an increase of 7 programs from 31 December 2021)
- Legacy Insurance transactions continue to have heavy weighting towards Q4
- Year-to-date two legacy transactions have been completed
- Strong pipeline of activity on which we expect to earn annual recurring fee income of 4.25% on Reserves Under Management
- R&Q reiterates guidance of achieving in excess of $90 million Pre-Tax Operating Profit in 2024
William Spiegel, Executive Chairman of R&Q, commented:
“2021 was a significant year for R&Q as we outlined an ambitious Five-Year Strategy that will see us transform into a fee-based, capital lighter business. This strategy will deliver higher quality and more predictable profits in both Legacy Insurance and Program Management, while also enabling us to better leverage our leading underwriting and origination capabilities. In turn, this will support our goal to further develop the compelling opportunities we have identified for these businesses.
“We have already taken major strides in delivering against this strategy including the launch of Gibson Re, ongoing momentum in Program Management and a number of organisational improvements which will make us more efficient, strengthen our culture and enhance our risk management. We also have underway a series of projects as part of our goal to be a more data-driven business.
“I am pleased to report continued momentum in our two core businesses. Program Management is now fully demonstrating its fee earning power, with Pre-tax Operating Profit increasing nearly fivefold to $21 million, and we expect it to achieve $1.75 billion of Gross Written Premium this year – one year ahead of schedule. Legacy Insurance continues to benefit from attractive market dynamics, completing 15 deals with Gross Reserves Acquired of $735 million. With the launch of Gibson Re, Legacy Insurance is in the process of moving to a recurring fee model and at year-end 2021 had Reserves Under Management of $417 million on which we will earn a 4.25% annual fee, alongside potential performance fees.
“We expect to complete our Fundraise in the coming weeks, and I have been encouraged by the strong indications of interest we have had from shareholders. This funding will give us the capital we need to de-lever our balance sheet and maintain the strong financial profile that is an important part of our growth. Looking ahead, I remain truly excited by this business. This can be seen in our reiterated expectation that R&Q will deliver over $90 million of Pre-Tax Operating Profit in 2024 – a major step change in our earnings potential. I would like to thank all our employees for their hard work and our shareholders for their continued support.”
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