19th Sep 2018 10:57
LONDON (Alliance News) - Randall & Quilter Investment Holdings Ltd on Wednesday reported an increased interim profit and two acquisitions that if approved before the end of the year will result in profit being "substantially ahead of market expectations".
The insurance company has agreed to acquire Global US Holdings Inc from an AXA Liabilities Managers SAS subsidiary for about USD80.5 million.
Global US Holdings owns 100% of Global Re US, a New York headquartered insurance company in run-off that underwrote predominantly property and casualty pro-rata treaties and facultative business for regional and specialty insurance companies on non-standard automobile, multi-peril and general liability lines in the US.
At the end of 2017, Global Re reported total assets of USD260 million and gross reserves of USD146 million. It made a pretax profit of USD15 million that year.
Should the sale pass regulatory approval, Randall & Quilter expects the acquisition to boost profit for 2018 "substantially ahead of market expectations".
Randall & Quilter also has agreed to acquire MPS Risk Solutions Ltd from The Medical Protection Society Ltd for GBP16.0 million, a "small discount" to MPS' net assets of GBP17.8 million.
The residual liabilities comprise primarily Professional Liability exposures arising in the UK. MPS Risk had gross claim reserves at the end of 2017 of GBP2.4 million.
Separately, Randall & Quilter reported an increased profit from continuing operations in the first half.
Pretax profit from continuing operations increased 39% to GBP7.8 million from GBP5.6 million. Excluding the disposals of Lloyd's Managing Agency and Insurance Services, pretax profit increased 1.9% to GBP5.5 million from GBP5.4 million.
The insurance company's total income increased 12% to GBP121.9 million from GBP108.7 million.
Gross premiums written increased 39% to GBP157.6 million from GBP113.0 million with earned premiums net of reinsurance up 12% to GBP113.5 million from GBP101.3 million.
The company's net asset value per share at the end of the first half increased 6.8% to 133.0 pence from 124.5p the previous year, as total gross assets increased 37% to GBP1.14 billion from GBP833.6 million.
Randall & Quilter said it is looking forward to the second half of 2018, and beyond, "with confidence".
The company expects trading in the second half to be "strong" with its Legacy and Program Management pipelines also "strong". Amid "wider industry challenges and resultant changes", Randall & Quilter believes demand will continue to grow.
Chairman and Chief Executive Officer Ken Randall said: "These days disposing of legacy portfolios is viewed by the traditional insurance market as mainstream capital management and consequentially demand for run-off solutions is growing as owners and managers of non-life insurers carve out non-performing books of business and seek to achieve greater capital efficiency.
"In program management, we have restructured our activities in the USA and Europe under the 'Accredited' brand and are seeing a high level of interest on both continents. Accredited USA is licensed to write 'admitted' insurance business in all 50 states and Accredited Europe is licensed to underwrite in all European member states. Both companies are rated A- (Excellent) by AM Best credit rating agency and this distinguishes their offering from competitors, especially in Europe.
"By year end, we expect to have secured contracts which will generate future gross written premiums in the region of USD500 million per annum and we are making good progress towards increasing our average commission to 5%. This rapid growth is being driven by our comprehensive licences, strong credit ratings and, in Europe, our ability to provide a credible 'Brexit Solution' for UK insurers seeking continued access to EU insurance markets.
"I do, however, stress that there is a natural time lag between securing the business, generating gross written premiums and then 'earning' the premiums and commissions."
Shares in Randall & Quilter were up 5.0% Wednesday at 190.00 pence each.
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