R&Q Half Year Results & Launch Of Gibson Re
Randall & Quilter Investment Holdings Ltd. announced its results for the half year ended 30 June 2021, and the launch of Gibson Re.
The company said, “Randall & Quilter Investment Holdings Ltd. [R&Q], the leading non-life global specialty insurance company focusing on the Program Management and Legacy Insurance businesses, announces its results for the half year ended 30 June 2021, and the launch of Gibson Re.
Strategic Update
- “Formed Gibson Re, a Bermuda-domiciled collateralised reinsurer [commonly known as a “sidecar”] with ~$300 million of capital; allows R&Q to support ~$2 billion of reserves1
- “Gibson Re will reinsure 80% of all of R&Q’s new qualifying legacy transactions for three years, with R&Q participating in 20% to promote alignment of interest
- “R&Q to receive annual recurring fees of 4.25% of Gibson Re’s reserves for at least six years, plus potential performance fees
- “Gibson Re will transform Legacy Insurance into primarily a recurring fee-based business
- “By 2023 expect run-rate Group Fee Income of greater than $140 million and Group Pre-Tax Operating Profit of over $90 million, assuming Gibson Re capital is fully utilised by 2023
H1 2021 Financial Highlights
- “Pre-Tax Operating Loss of $23.5 million; loss reduced to approximately breakeven when including two signed Legacy Insurance transactions with $23 million of Underwriting Profit that are expected to close in H2 2021, reflecting the episodic earnings profile associated with Legacy Insurance
- “Program Management Gross Written Premium of $890 million and Fee Income of $50 million [H1 2021 annualised], increases of 80% and 135%, respectively, from H1 2020
- “Program Management Pre-Tax Operating Profit of $20 million [H1 2021 annualised] compared with $1.6 million [H1 2020 annualised]; Pre-Tax Operating Profit Margin of 40% compared with 7.5% at H1 2020
- “Program Management Gross Written Premium target for FY 2023 increased to $1.75 billion from $1.5 billion
- “Legacy Insurance completed eight transactions
- “Legacy Insurance pipeline of over $1 billion of reserves; traditionally ~70% of transactions complete in H2
- “Changed reporting currency to US Dollars for fiscal year 2021
- “Interim dividend for H1 2021 of 2.0 pence per share and reiteration of progressive dividend policy of growing dividend from 4 pence per share in FY 2020
Q3 2021 Update
- “Program Management added 8 new programs in July and August increasing Contracted Premium to ~$1.8 billion
- “Legacy Insurance completed the first Insurance Business Transfer in Oklahoma between two unaffiliated parties, opening up a new avenue for US legacy business
William Spiegel, Executive Chairman of R&Q, commented: “Over the course of 2021, we have successfully implemented a key component of our Five-Year strategy – developing a more fee-based business. Our announcement of the formation of Gibson Re starts the transformation of R&Q’s Legacy Insurance business from being balance sheet intensive with episodic earnings to a more capital light and predictable, largely recurring fee-based model. Gibson Re is a $300 million Bermuda-domiciled collateralised reinsurer owned and funded by sophisticated insurance investors. Our Legacy Insurance business now joins our Program Management business in generating most of its future revenues from annual recurring fees.
“The Board of Randall & Quilter Investment Holdings Ltd. is pleased to confirm that it will pay an interim dividend of 2.0 pence per share on 12 October 2021. The dividend will be paid to shareholders on the register on 24 September 2021, with a corresponding ex-dividend date of 23 September 2021. “
