Randall & Quilter Investment Holdings Ltd. · OTC:RQIHF
Randall & Quilter Investment — H1 2018 Earnings Presentation
18 slides from Randall & Quilter Investment's earnings presentation, Sep 19, 2018
Slide 1: Interim results for the 6 months ended 30 June 2018
RANDALL & QUILTER INVESTMENT HOLDINGS LTD. Interim results for the 6 months ended 30 June 2018 PRIVATE & CONFIDENTIAL STRATEGY I INNOVATION I EXPERTISE SEPTEMBER 2018 | WWW.RQIH.COM | 1
Slide 2: Disclaimer
DISCLAIMER STRATEGY I INNOVATION I EXPERTISE Important information The information provided in this presentation is for the sole use of those attending the presentation; it shall not and does not constitute an offer or solicitation of an offer to make an investment in Randall & Quilter Investment Li
Slide 3: Financial Performance
FINANCIAL PERFORMANCE STRATEGY I INNOVATION I EXPERTISE RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2018 Financial highlights for the 6 months ended 30 June 2018: • Pre-tax Profit of £5.5m (2017: £5.4m) • Basic earnings per share of 3.6p (2017: 7.9p) • ROE (annualised) of 6.8% (2017: 15.4%) • Proposed di
Slide 4: Operational Highlights
OPERATIONAL HIGHLIGHTS STRATEGY I INNOVATION I EXPERTISE TO 30 JUNE 2018 • Net proceeds, c.£47m, of placing and open offer in November 2017 fully deployed to strengthen the AM Best credit ratings of Accredited and Malta to A- (Excellent). • Insurance Services Division sold in January 2018 which comp
Slide 5: Group Strategy
GROUP STRATEGY STRATEGY I INNOVATION I EXPERTISE MISSION STATEMENT To offer investors profits and capital extractions from legacy insurance acquisitions/reinsurances and grow underwriting revenue and commission income from our licensed carriers in the US and UK/EU writing niche and profitable busine
Slide 6: Strategy Implementation
STRATEGY IMPLEMENTATION STRATEGY I INNOVATION I EXPERTISE • Disposal programme complete: ⁻ Insurance Services SOLD ⁻ Captive Management SOLD ⁻ Lloyd’s Managing Agency SOLD ⁻ Norway SOLD ⁻ Yachtsure MGA SOLD ⁻ Synergy MGA SOLD ⁻ Gibraltar CLOSED ⁻ US Services CLOSED ⁻ Syndicate 1991 CEASES AFTER 2017
Slide 7: Program Business – Illustrative Development
PROGRAM BUSINESS – ILLUSTRATIVE DEVELOPMENT STRATEGY I INNOVATION I EXPERTISE SCENARIO 1 Contracted annual Gross Premium of $500m signed up by December 2018 and assuming zero future growth or new contracts after 2018. Disclaimer: The forward-looking illustration above is based on certain assumptions
Slide 8: Program Business – Illustrative Development
PROGRAM BUSINESS – ILLUSTRATIVE DEVELOPMENT STRATEGY I INNOVATION I EXPERTISE SCENARIO 2 Contracted annual Gross Premium of $500m signed up by December 2018 and assuming growth of $125m (from existing and new) contracted annual Gross Premium per quarter. Disclaimer: The forward-looking illustration
Slide 9: Program Business – Illustrative Development
PROGRAM BUSINESS – ILLUSTRATIVE DEVELOPMENT STRATEGY I INNOVATION I EXPERTISE SCENARIO 3 Contracted annual Gross Premium of $500m signed up by December 2018 and assuming growth of $50m (from existing and new) contracted annual Gross Premium per quarter. Disclaimer: The forward-looking illustration a
Slide 10: Investment Portfolio and Returns
INVESTMENT PORTFOLIO AND RETURNS STRATEGY I INNOVATION I EXPERTISE INVESTMENT PORTFOLIO AS AT 30 JUNE 2018 2018 – Investment Return (6 Months) 0.71% 2017 – Investment Return (Full Year) 1.60% | WWW.RQIH.COM | 10
Slide 11: Business Priorities and Outlook
BUSINESS PRIORITIES AND OUTLOOK STRATEGY I INNOVATION I EXPERTISE BUSINESS PRIORITIES • Continue to expand legacy ⁻ Possibly via a partnership model ⁻ Captives and Lloyd’s are particular targets • Build program management ⁻ Contracts expected to generate annualised GWP of US$500m by December 2018 ⁻
Slide 12: Summary
SUMMARY STRATEGY I INNOVATION I EXPERTISE • A much stronger underlying result in H1 2018 • Completion of disposals in January 2018 • Increasing size of legacy transactions and exciting growth prospects for Program management in the US and UK/Europe • Brexit and Solvency II are presenting further opp
Slide 13: Appendix A: Fronting/Program Overview
APPENDIX A : FRONTING/PROGRAM OVERVIEW STRATEGY I INNOVATION I EXPERTISE • Fronting arrangements have been around for decades – But the environment is changing • What is fronting? ⁻ Business is sourced, priced and serviced by MGAs who have strictly controlled delegated underwriting authority ⁻ R&Q u
Slide 14: Appendix A: Fronting/Program Overview (cont'd)
APPENDIX A : FRONTING/PROGRAM OVERVIEW (CONT’D) STRATEGY I INNOVATION I EXPERTISE • What are the risks? ⁻ MGA quality ⁻ Retentions ⁻ Reinsurer credit risk ⁻ “Gaps” between assumed risk and reinsurance ⁻ Reputational risk if assumed business is loss making ⁻ Compliance and conduct risk • R&Q risk mit
Slide 15: Appendix B: 2018 M&A Activity
APPENDIX B : 2018 M&A ACTIVITY STRATEGY I INNOVATION I EXPERTISE COMPLETED IN H1 Hamilton Underwriting CA domiciled self- US Airline US RRG Sitex Cell Syndicate 3334 insurer 2014 & prior Policy issuance to provide Captive Reinsurance Loss portfolio Transfer Novation Reinsurance to close full finalit
Slide 16: Appendix C: Income Statement for the 6 months ended 30 June 2018
APPENDIX C : INCOME STATEMENT FOR THE 6 MONTHS ENDED 30 JUNE 2018 STRATEGY I INNOVATION I EXPERTISE Randall & Quilter Investment Holdings Ltd. 6 months 6 months Consolidated Income Statement 2018 2017 £'000 £'000 Gross premiums written 157,643 112,989 Reinsurers' share of gross premiums (45,278) (9,
Slide 17: Appendix D: Balance Sheet as at 30 June 2018
APPENDIX D : BALANCE SHEET AS AT 30 JUNE 2018 STRATEGY I INNOVATION I EXPERTISE Randall & Quilter Investment Holdings Ltd. 30 June 31 December 30 June Consolidated Balance Sheet 2018 2017 2017 £'000 £'000 £'000 Assets Intangible Assets 19,430 20,712 31,406 Investments in associates - - - Property, p
Slide 18: Appendix E: Executive Directors
APPENDIX E : EXECUTIVE DIRECTORS STRATEGY I INNOVATION I EXPERTISE Ken Randall, FCCA • Mr. Randall is a certified accountant and has worked in the Insurance industry for almost 40 years. • During the early 1980s, Mr. Randall was Head of Regulation at Lloyd’s, which was then a self-regulated Group Ch
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