AGM Statement

RNS Number : 8494I

Randall & Quilter Inv Hldgs PLC

22 June 2011

 



Date:	22 June 2011
On behalf of:	Randall & Quilter Investment Holdings plc ("R&Q", "Randall & Quilter" or the "Group")
For immediate release

AGM Statement

Randall and Quilter Investment Holdings plc (AIM:RQIH), the specialist non-life insurance investor, service provider and underwriting manager, is holding its Annual General Meeting this morning at 11.00am. In his address to shareholders, Chairman and CEO Ken Randall, will update shareholders as follows:

"Since announcing our final results on 28 April 2011, I am pleased to confirm that the business continues to perform satisfactorily.

Our non US owned insurance company run-offs are showing early signs of a promising outcome. In recent weeks, we have also released £2.0m through the combination of a capital reduction and a dividend from La Licorne, acquired by the Group last year. This is further proof of our focus on insurance investments which we can monetise relatively quickly after acquisition. As previously stated, the development of asbestos cases in the US portfolios brings some additional uncertainty to claims movements in those portfolios but we do at least have the benefit of substantial reinsurance protection.

The (re)insurance debt acquisition activity has continued with a further sizeable acquisition since the announcement of our 2010 results. We are hoping to finalise a capital partnership agreement over the summer period which would enable us to take full advantage of the larger sized acquisition opportunities we are seeing in this area. This partnership model will ensure that our own portfolio is kept well diversified and that we enhance our return on invested capital.

We are examining a number of interesting investment opportunities in the Lloyd's Reinsurance to Close (RITC), captives and insurance company markets. Although demand and competition for such investments remains strong, the number of opportunities does appear to have increased. Once again, we are progressing discussions with capital partners to ensure we are able to acquire larger portfolios as the opportunities arise.

Our more proactive approach to investment strategy, the decision to increase duration carefully and the diversification into areas such as Municipals (and, to a small degree, ABS and high yielding equities) were rewarded in the period with better than anticipated investment returns. Whilst we believe that short term rates will remain very low for some time, recent falls in medium and longer dated bond yields seem overdone. As a result, we have decided to sell down our longer dated Municipals and other securities and realise some of the capital gains achieved in the year to date. We will reinvest in short dated, and where possible, floating rate paper until later in the year when we expect longer term rates to rise.

The year has begun well in the Insurance Services Division with some good new business wins in both the run-off and live areas. As indicated in our 2010 results statement, our aim this year is to consolidate the various businesses recently acquired and to deliver the organic growth initiatives. The reengineering of Reinsurance Solutions US is on track and we have seen an improvement in both the quality of revenue and the quantity of new business, with specific opportunities in 'Workers Compensation Loss Mitigation' and the 'First System', which aids the search for additional reinsurance recoveries.

Our progress in marketing services to Lloyd's agencies (premium credit control, binding authority reporting and market statistics) and 'broker wrap' is also pleasing. We are hopeful that favourable developments on the Erika tanker loss and the remaining WTC exposures in Syndicate 3330,which we manage for Advent, will secure good profit commission for the Group in the current year.

We continue to look at ways of expanding the scope and scale of our Captives division and remain committed to establishing an attractive independent alternative to the captive management operations of the large US brokers. Following the less than satisfactory results of our ground-up initiative last year, we are encouraged by progress in securing a foothold in the Nordic region through the acquisition of an existing manager,. Recent focus has been on leveraging our operations to source acquisition opportunities of captive entities and on vertical integration into captive formation. This division also offers a valuable insight into regulatory change across a number of key offshore and onshore insurance jurisdictions. The core Bermudian operations continue to perform satisfactorily with client wins from new territories such as Canada and Latin America compensating for slower demand from new and existing US clients.

We are growing income in the Underwriting Management Division more slowly than expected as written premiums have fallen behind budget due to a combination of early delays in certain of our businesses becoming fully operational and a hitherto poor rating environment.  As the impact of these factors begins to decrease, income figures are improving. Despite the slow development of premium income in 2011, we are ahead of plan in terms of hiring teams in our delegated underwriting business and are making excellent progress in building the division for future profitability.

In our 2010 full year results statement, we warned about the impact of Solvency II on our ability to start new turnkey syndicates for launch in January 2012 and this remains the case. Nevertheless, Lloyd's remains an underwriting platform and we are pursuing a number of prospects for launch later next year.

The positive resolution of the Seaton and Stonewall litigation will decrease the corporate overhead charge for the year as damages and costs are recovered and, more importantly, this has removed a source of considerable distraction for me personally and for the wider Group.

Overall, we look forward to the current year and beyond with confidence. The final outcome of the insurance investments division is uncertain at this stage of the year given the timing of reserve reviews and the vagaries of the investment markets but early results look promising and the de-risking of the investment portfolio should help. The improvement in the outlook for the acquisition of insurance assets is encouraging. Whilst the contribution this year from the Underwriting Management Division may be held back by our continuing investment in new teams, the outlook looks ever more promising. Furthermore, the main operational and cash generating businesses are in good health."

ENDS

Enquiries to:

Randall & Quilter Investment Holdings plc	www.rqih.co.uk
Tom Booth	Tel: [phone]
Numis Securities Limited
Stuart Skinner (Nominated Advisor)	Tel: [phone]
Charles Farquhar (Broker)	Tel: [phone]
Shore Capital Stockbrokers Limited
Dru Danford/Stephane Auton	Tel: [phone]
Redleaf Polhill Communications	r&[e-mail]
Emma Kane/Alicia Jenning	Tel: [phone]

Notes to Editors:

Since formation, Randall & Quilter has pursued a buy and build strategy to create a comprehensive range of investment activities and services in the global non-life insurance market and is focused on the following four core areas:

-    Insurance Investments;

-    Insurance Services;

-    Underwriting Management; and

-    Captives.

The Group currently:

-    has a portfolio of nine insurance companies in run-off (from the UK, US and Europe) with net assets of c.£73m as at 31 December 2010;

-    has wide service capability in both the 'live' and 'run-off' markets

-    has a team of approximately 350 insurance professionals based in the UK, USA, Bermuda, Canada and Gibraltar; and

-    provides 'turnkey' management services to new Lloyd's syndicate 1897 and manages two RITC ('run-off') syndicates.

The Group was founded by Ken Randall, Executive Chairman and Chief Executive, and Alan Quilter, Group Finance Director who both have extensive experience in the industry including as Head of Regulation of Lloyd's and as Head of the Market Financial Services Group respectively.

 

END

 

 

AGMFBMITMBATBIB