Randall & Quilter Investment Holdings Ltd. · OTC:RQIHF
Randall & Quilter Investment — R&Q Investment Holdings — Investor Presentation (November 2023)
24 slides from Randall & Quilter Investment's investor presentation, Nov 14, 2023
Slide 1: A Leading Non-Life Legacy Insurance Company
A LEADING NON-LIFE LEGACY INSURANCE COMPANY November 14, 2023 A future of opportunity
Slide 2: Disclaimer
Disclaimer The information contained in this document (“Presentation”) has been prepared by R&Q Investment Holdings Ltd. (the “Company”). It may not be reproduced or transmitted, without the express written consent of the Company. Except where otherwise indicated herein, the information provided her
Slide 3: Introduction
Introduction ▪ The contents of this Presentation assume: • R&Q has obtained shareholder approval for the sale of Accredited • R&Q has received the necessary consents, waivers and agreements of its banks and credit providers so as to enable R&Q to proceed with the sale of Accredited • the necessary r
Slide 4: Key attractions of R&Q Legacy
Key attractions of R&Q Legacy ✓ Leading legacy company focused on small and medium sized market opportunities ✓ Management team with a long history in transacting and managing a legacy insurance business ✓ Go to market strategy to deliver growth in Reserves Under Management and Fee Income ✓ Platform
Slide 5: Post separation, R&Q will be a refocused, global Legacy insurance business
Post separation, R&Q will be a refocused, global Legacy insurance business Legacy platform with offices in Bermuda, the U.S., and the U.K. with over 100 people across M&A, claims management, servicing, actuarial and finance functions Platform Overview Select Corporate Counterparties Diversified Line
Slide 6: Deeply experienced management team
Deeply experienced management team R&Q Legacy will be led by a management team with significant collective experience in the non-life run-off market Jeff Hayman* Paul Bradbrook* Parri Spector* Chris Riseborough* Andrew Pinkes* Non-Executive Chairman(1) Chief Financial Officer(2) Co-Head M&A Senior V
Slide 7: Legacy platform with broad capabilities
Legacy platform with broad capabilities Generate fee and underwriting income by providing bespoke solutions to (re)insurance companies and corporate owners of legacy liabilities Platform Value Chain Integration & Origination Underwriting Execution Onboarding Capital Providers Insurers & seeking spec
Slide 8: Significant Legacy market opportunity
Significant Legacy market opportunity Global Market Opportunity(1) Historical Global Run-Off Reserves ($bn)(1)(2) North America Europe Total: $464bn Number Total: $319bn 34 53 48 of Deals: 960 11% 864 6% CAGR 730 Rest of World Total: $177bn 2018 2021 2022 Market Sentiment of Forward-Looking Deal Vol
Slide 9: Clearly defined value creation strategy
Clearly defined value creation strategy i ii iii Grow Fee Income Reduce Expenses Decrease Volatility ▪ Capital-efficient with higher potential ROE ▪ R&Q is focused on making the business more ▪ Focus on de-risking and minimizing volatility in driven by recurring fee income automated, efficient, and
Slide 10: R&Q forecasts Legacy to return to profitability in 2025
R&Q forecasts Legacy to return to profitability in 2025 Positioned for profitability through transition to sustainable, fee-based model Path to Profitability in 2025(1) ($ in millions) Reinvestment 1H 2023 1H 2023 Annualized ~ $33 m 2025F Annualized Operating A Investment Income(2) Operating Expense
Slide 11: Multiple capital vehicles represent substantial opportunity to continue sustainable fee income growth
Multiple capital vehicles represent substantial opportunity to continue sustainable fee income growth Over $1B Reserves Under Over $600m Gibson Corporate Liability Opportunity Management (RUM) Re Sidecar Capacity ▪ R&Q Legacy has been on the process of transitioning to a fee- ▪ Gibson Re, R&Q’s rein
Slide 12: R&Q Legacy pipeline
R&Q Legacy pipeline Global M&A team’s current(1) pipeline contains greater than $850m in reserves. On average there are 12-20 ‘live’ deals across various stages of the deal life-cycle representing $750m - $1.2b of total reserves ▪ R&Q focuses on: Target Market ▪ Reinsurance: mid-market, transactions
Slide 13: Continued focus on identifying and actioning expense opportunities
Continued focus on identifying and actioning expense opportunities R&Q has identified a number of opportunities to reduce expenses Operating Expense(1) Cost Cutting Strategy ($ in millions) ✓ Making the business more automated, efficient and scalable ✓ Legacy share of the announced automation projec
Slide 14: De-risking strategies across the portfolio
De-risking strategies across the portfolio R&Q is executing strategies to meaningfully reduce volatility, improve stability and quality of earnings Focus on ▪ R&Q has been disciplined in a soft legacy market, executing fewer transactions, and continues to refine and enhance its claims and underwriti
Slide 15: Substantial opportunity for excess capital generation
Substantial opportunity for excess capital generation R&Q expects to generate substantial excess capital for future deployment as the retained in-force book runs off In-Force Book Expected Run Off Commentary Net Reserves(1) ▪ As claims payments are made, R&Q frees up capital held against reserves wh
Slide 16: Repositioning the investment portfolio is expected to enhance earnings strength
Repositioning the investment portfolio is expected to enhance earnings strength Portfolio is invested in high quality investment grade assets Asset Class Rating(1) Duration(1) Yield(2) 1% 4% 1% Yield at 1H 2023 8% 19% 24% 25% Asset Class Book Market 33% 14% Corporate 2.6% 5.9% 51% 12% Government 2.6
Slide 17: Pro forma R&Q Legacy balance sheet to execute strategy from a position of strength
Pro forma R&Q Legacy balance sheet to execute strategy from a position of strength The sale of Accredited will enable the Board to undertake a material de-leveraging of R&Q which will enhance the business' ability to execute the Board's existing strategy of transitioning to a capital efficient and s
Slide 18: Significantly de-levered, better capitalized legacy business
Significantly de-levered, better capitalized legacy business R&Q expects to materially improve its capitalization post-transaction, with pro forma leverage decreasing from 57% to 36% and pro forma capital ratio increasing from 152% to 225% Group Pro-Forma 1H 2023 Leverage Group 1H 2023 Pro Forma Cap
Slide 19: Accredited Transaction - Process Summary
Accredited Transaction - Process Summary A strategic transaction committee (“STC”), comprising non-executive directors, was established to govern the comprehensive M&A process 94 Counterparties Contacted ▪ 94 counterparties contacted, constituting a diverse group of both sponsors and strategics 59 ▪
Slide 20: Plan Overview
Plan Overview Pursue transactions to reduce balance Improve Generate Double fee income Reduce Expenses sheet volatility and investment income additional surplus by YE 2025 by 15% to 20% improve quality of performance capital earnings As the company returns to profitability, we will review our divide
Slide 21: Appendix
» INSURANCE HOLDINGS »»? Appendix
Slide 22: Management Biographies
Management Biographies Name & Position Experience ▪ Joined in 2023 as Non-Executive Chairman with 40+ years of experience in the global insurance industry ▪ Jeff previously served for 5 years as a Board Member and Chairman of the Risk and Investment Committee at Zurich Insurance Group (SIX:ZURN) Jef
Slide 23: Management Biographies
Management Biographies Name & Position Experience ▪ Having joined in 2022 as SVP in M&A, Huw has 25+ years of experience in the legacy insurance industry Huw Battrick ▪ Currently a fellow of the Association of Chartered Certified Accountants Co-Head M&A ▪ Previously served as Director within the M&A
Slide 24: Expected cash proceeds from transaction
Expected cash proceeds from transaction Accredited is expected to generate net cash proceeds to R&Q of $300m; $170-$210m will be available at closing and is expected to be used settle debt obligations Expected Net Cash Proceeds ($m) Commentary Purchase Price 465 • Equity value is based on the purcha
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