Randall & Quilter Investment Holdings Ltd. · OTC:RQIHF
Randall & Quilter Investment — FY2020 Earnings Presentation
31 slides from Randall & Quilter Investment's earnings presentation, 2021
Slide 1: Full Year 2020 Results Investor Presentation
Full Year 2020 Results Investor Presentation PRIVATE & CONFIDENTIAL STRATEGY I INNOVATION I EXPERTISE A history of success A future of opportunity A leading non-life global specialty insurance company | WWW.RQIH.COM |
Slide 2: We Are a Unique Specialty Insurance Company
WE ARE A UNIQUE SPECIALTY INSURANCE COMPANY STRATEGY I INNOVATION I EXPERTISE Program Management and Legacy Insurance businesses are both well positioned to capitalise on favourable market conditions 8 1 Market leader in both Strong balance sheet and Program Management financial track record and Leg
Slide 3: FY 2020 Results
STRATEGY I INNOVATION I EXPERTISE FY 2020 RESULTS | WWW.RQIH.COM | 2
Slide 4: 2020 Year in Review – Strong Performance
2020 YEAR IN REVIEW – STRONG PERFORMANCE STRATEGY I INNOVATION I EXPERTISE Accelerated Growth for Group Breakthrough for Program Management Record Year for Legacy Insurance Pre-Tax Operating Profit of £16m 18 new programs (48 total Programs) 19 deals comprising £674m of assets and (102% increase ove
Slide 5: Group Results Experienced Accelerated Growth
GROUP RESULTS EXPERIENCED ACCELERATED GROWTH STRATEGY I INNOVATION I EXPERTISE Pre-Tax Operating Profit grew 102% and Operating EPS grew 38%; 4.0p per share distribution (£m, except where noted) FY 2020 FY 2019 % Change Management Discussion & Analysis Key Performance Indicators ▪ Pre-Tax Operating
Slide 6: Core Business Segments Profitable; Fee Income Grew 89%
CORE BUSINESS SEGMENTS PROFITABLE; FEE INCOME GREW 89% STRATEGY I INNOVATION I EXPERTISE Strong year-over-year results in Program Management and Legacy Insurance; Fee Income increased 89% and represents 17% of earnings Management Discussion & Analysis (£m, except where noted) FY 2020 FY 2019 % Chang
Slide 7: Program Management Had a Breakthrough Year Becoming Profitable
PROGRAM MANAGEMENT HAD A BREAKTHROUGH YEAR BECOMING PROFITABLE STRATEGY I INNOVATION I EXPERTISE Program Management earned $3.4m and was profitable; on path toward goal of $1.5b of Gross Written Premium in 2023 Management Discussion & Analysis ($m) FY 2020 FY 2019 % Change Number of Programs 48 30 6
Slide 8: Legacy Insurance Had a Record Year
LEGACY INSURANCE HAD A RECORD YEAR STRATEGY I INNOVATION I EXPERTISE Legacy Insurance has a 5-year average Operating Return on Tangible Equity of 20% Management Discussion & Analysis (£m) FY 2020 FY 2019 % Change Deals Completed 19 16 19% ▪ Completed 19 deals, acquired assets of £674m and Cash & Inv
Slide 9: Investment Portfolio Grew 28% to £1,068m
INVESTMENT PORTFOLIO GREW 28% to £1,068m STRATEGY I INNOVATION I EXPERTISE Investment portfolio remained conservatively positioned and with short duration Investment Portfolio By Credit Rating (YE 2020) YE 2020 Results 4% 4% Total: £1,068m1 ▪ Continued focus on high quality, liquid fixed income with
Slide 10: Business Segment Highlights
STRATEGY I INNOVATION I EXPERTISE BUSINESS SEGMENT HIGHLIGHTS | WWW.RQIH.COM | 9
Slide 11: Program Management Is Growing and Profitable
PROGRAM MANAGEMENT IS GROWING AND PROFITABLE STRATEGY I INNOVATION I EXPERTISE Premium and Fee Income are growing meaningfully; generated first Pre-Tax Operating Profit in 2020 Contracted Premium At Period End ($m) Gross Written Premium ($m) 1,281 539 842 369 413 149 119 37 2017 2018 2019 2020 2017
Slide 12: Program Management Is Well Diversified
PROGRAM MANAGEMENT IS WELL DIVERSIFIED STRATEGY I INNOVATION I EXPERTISE Diversification reduces reliance on any one program, product type or region; risk exposure primarily to A- rated or better reinsurers FY 2020 GPW by Product ($539m) FY 2020 GPW by Region ($539m) Other Netherlands Other Commerci
Slide 13: Legacy Insurance Is Growing and Deploying Capital at Target Returns
LEGACY INSURANCE IS GROWING AND DEPLOYING CAPITAL AT TARGET RETURNS STRATEGY I INNOVATION I EXPERTISE Executed a record number of transactions in 2020; 5-year average Operating Return on Tangible Equity remains above our 15% target Cum. Cash & Investments and Net Reserves Acquired (£m) Pre-Tax Opera
Slide 14: Legacy Insurance Platform Has a Wide Range of Capabilities
LEGACY INSURANCE PLATFORM HAS A WIDE RANGE OF CAPABILITIES STRATEGY I INNOVATION I EXPERTISE Since 2009 R&Q has completed 119 transactions in 36 regulatory jurisdictions representing ~£1.1b of net reserves # of Deals by Type (2009 – YE 2020) Net Reserves by Product (2009 – YE 2020) # of Deals by Reg
Slide 15: Market & Strategic Update
STRATEGY I INNOVATION I EXPERTISE MARKET & STRATEGIC UPDATE | WWW.RQIH.COM | 14
Slide 16: Our Specialty Businesses Are Key Components of the Insurance Market
OUR SPECIALTY BUSINESSES ARE KEY COMPONENTS OF THE INSURANCE MARKET STRATEGY I INNOVATION I EXPERTISE Program Management is a fee-based business; Legacy Insurance is a balance sheet intensive specialty business Program Management Legacy Insurance Managing General Agents and Reinsurers P&C (Re)Insura
Slide 17: Our Profit Model Comprises Underwriting, Fee and Investment Income
OUR PROFIT MODEL COMPRISES UNDERWRITING, FEE AND INVESTMENT INCOME STRATEGY I INNOVATION I EXPERTISE Gross Operating Income is primarily comprised of underwriting income; however, fee-based income is beginning to grow and now represents 17% 2020 Gross Operating Income Overview ▪ Gross Operating Inco
Slide 18: Program Management Market – Favorable Growth Dynamics
PROGRAM MANAGEMENT MARKET – FAVORABLE GROWTH DYNAMICS STRATEGY I INNOVATION I EXPERTISE Large market segment with long-term structural changes supporting continued growth and the ability to increase our market share Significant Growth of Independent Reinsurers’ Demand for Premiums Independent Progra
Slide 19: Legacy Insurance Market – Significant Growth Catalysts
LEGACY INSURANCE MARKET – SIGNIFICANT GROWTH CATALYSTS STRATEGY I INNOVATION I EXPERTISE Global P&C run-off liabilities are estimated to be $864b, with strong secular tailwinds for growth and profitability Sizing the Market Opportunity1 Legacy Market Growth Catalysts Europe North America Total: $302
Slide 20: There Are High Barriers to Entering Our Businesses
THERE ARE HIGH BARRIERS TO ENTERING OUR BUSINESSES STRATEGY I INNOVATION I EXPERTISE We are well established in high growth markets which require meaningful infrastructure to compete Program Management Legacy Insurance Conflict of interest for live “A-” A.M. Best rating players 1 1 High switching co
Slide 21: Our Capital and Liquidity Framework Is Aligned with Our Strategy
OUR CAPITAL AND LIQUIDITY FRAMEWORK IS ALIGNED WITH OUR STRATEGY STRATEGY I INNOVATION I EXPERTISE Capital framework and progressive dividend policy provides flexibility to prudently and profitably grow, while providing a growing dividend to shareholders Capital and Liquidity Framework Dividend Poli
Slide 22: Raised £173m of Capital in 2020, Fully Deployed in Growth Opportunities
RAISED £173m OF CAPITAL IN 2020, FULLY DEPLOYED IN GROWTH OPPORTUNITIES STRATEGY I INNOVATION I EXPERTISE Business is currently consuming capital for attractive growth opportunities; expectation for self-funding in near-term 2020 Sources and Uses of Capital (£m) Current State: Net Capital Consumptio
Slide 23: Q1 2021 Update
Q1 2021 UPDATE STRATEGY I INNOVATION I EXPERTISE In Q1 2021 we continue to see growth in our business Program Management Legacy Insurance ▪ Gross Written Premium grew 52% to $185.2m, ▪ Completed the acquisition of GE’s captive in from $122.3m Ireland: ~£30m of reserves ▪ Fee Income grew 91% to $9.7m
Slide 24: Five Year Strategic Vision
FIVE YEAR STRATEGIC VISION STRATEGY I INNOVATION I EXPERTISE Our vision is to become a more capital efficient, fee-oriented and data-driven company focused on our core strengths of insurance origination, underwriting and claims management; requires four key initiatives ▪ Raise alternative sources of
Slide 25: Our Business Is a Combination of a Fee Business and a Specialty Insurer
OUR BUSINESS IS A COMBINATION OF A FEE BUSINESS AND A SPECIALTY INSURER STRATEGY I INNOVATION I EXPERTISE Program Management is a recurring fee business, while Legacy Insurance is currently a balance sheet business Program Management Legacy Insurance Corporate / Other Annual Recurring Fee Income Und
Slide 26: We Are a Unique Specialty Insurance Company
WE ARE A UNIQUE SPECIALTY INSURANCE COMPANY STRATEGY I INNOVATION I EXPERTISE Our vision is to become a more capital efficient, fee-oriented and data-driven company focused on our core strengths of insurance origination, underwriting and claims management 8 1 Market leader in both Strong balance she
Slide 27: Financial Information
FINANCIAL INFORMATION APPENDIX
Slide 28: Group Consolidated Financials
GROUP CONSOLIDATED FINANCIALS STRATEGY I INNOVATION I EXPERTISE (£m) FY 2020 FY 2019 % Change (£m) YE 2020 YE 2019 % Change Tangible Day 1 Gain 80.2 52.1 54% Assets Net Earned Premium 41.0 28.1 46% Cash and Investments 1,263.9 832.2 52% Investment in Associates 33.4 0.0 NM Net Inv. Income (ex U/R GL
Slide 29: Segment Financials
SEGMENT FINANCIALS STRATEGY I INNOVATION I EXPERTISE Program Program (£m, except where noted) Management ($) Management Legacy Insurance Corp / Other Total FY 2020 Pre-Tax Operating Profit 3.4 2.6 38.1 (24.7) 16.0 Unearned Program Fee Revenue (4.0) (3.1) 0.0 0.0 (3.1) Net Intangibles 0.0 0.0 15.5 0.
Slide 30: End Notes
END NOTES STRATEGY I INNOVATION I EXPERTISE ▪ Pre-Tax Operating Profit is a measure of how our core businesses performed adjusted for Unearned Program Fee Revenue, intangibles created in Legacy Insurance acquisitions and net realised and unrealised investment gains on fixed income assets. ▪ Tangible
Slide 31: Company Overview & History
COMPANY OVERVIEW & HISTORY STRATEGY I INNOVATION I EXPERTISE R&Q has been operating in the insurance industry for over 30 years Highlights History ▪ Non-life insurer focused on two business 1991 Founded as an acquirer of run- ▪ Legacy Insurance: Acquirer of run-off insurance assets and off assets an
Randall & Quilter Investment Holdings — FY2020 Earnings Presentation on 6ix