Proposed Return of Value to Shareholders

RNS Number : 1548O

Randall & Quilter Inv Hldgs PLC

14 September 2011

 



Date:	14 September 2011
On behalf of:	Randall & Quilter Investment Holdings plc
For immediate release

Randall & Quilter Investment Holdings plc

Proposed Return of Value to Shareholders

of

3.2 pence per Existing Ordinary Share

Randall & Quilter Investment Holdings plc ("Randall & Quilter" or the "Company") today announces that it proposes to return 3.2 pence per Existing Ordinary Share to Shareholders.

Return of Value

In addition to generating cash profits from the Group's Insurance Services and Captives divisions, the Company aims to make capital extractions from its insurance investments by managing down the liabilities of its insurance company portfolio and seeking regulatory approval for the release of surplus capital. The quantum and timing of these capital extractions is by nature uncertain but as illustrated by the recent release of £2 million from La Licorne, the release of $5 million from Goldstreet Insurance Company in 2010 and £11 million from Chevanstell Limited in 2008, these extractions can be significant. Continuing progress in managing down the liabilities and enhancing the capital efficiency of the portfolio by intra group transfers also bodes well for further releases in the future.

To reflect the source of profits being generated by the Group and to increase the flexibility of the method by which capital is returned to Shareholders, the Company is proposing to make a return of cash to Shareholders through the issue of E and F Shares. In light of the proposed Return of Value, the Company is not proposing to pay an interim dividend for the 2011 year, but the Company may choose to make future returns of value or ordinary dividend payments, whilst maintaining its stated policy to grow total cash returns to Shareholders by at least 5 per cent. per annum from the base level of 7 pence per share paid for the financial year ended 2009, now grossed up to 7.4 pence per share, following the recent share repurchase programme.  The Directors believe the Return of Value represents the most efficient and effective way to return cash to Shareholders.

The Return of Value, together with a proposal to facilitate electronic communications with Shareholders described below, requires the approval of Shareholders, which will be sought at a General Meeting to be held at 110 Fenchurch Street, London EC3M 5JT at 10 a.m. on 30 September 2011. The notice of the General Meeting is set out in Part 9 of the circular. The Reduction of Capital included in the Return of Value is subject to the confirmation of the Court.

Current trading and prospects

We expect that the full year result will meet expectations. Damages and cost recoveries from the successful resolution of the Seaton & Stonewall legal dispute should counteract the cost of the Insurance Services Division restructuring and the continued investment and slower than anticipated income development in the Underwriting Management Division.

The second half of the year should benefit from the significant expected profit commission on new RITC Syndicate 102, further profit commission on Syndicate 3330, deferral of new business income from the first half, further reserves releases in the non-US owned insurance company portfolios and a lower cost base following recent restructuring and the full expensing of bonus payments in the first half.  Against this, investment income is likely to be considerably lower as recent market volatility has impacted the value of the perpetuals and running yields have reduced yet further.  As previously commented on, the recent uptick in US asbestosis cases also provides some uncertainty for R&Q Reinsurance Company (US) when the review is carried out later in the year.

Operationally, the business is in good shape and we are pleased with the progress we have made in launching new MGAs and attracting quality niche underwriting teams.  The investment in the new captive platforms should also help us meet our ambitions to be an attractive alternative to the broker owned operations and bring profitable growth in the future.  This continued investment will, however, inevitably have a short term drag on financial performance.

Whilst the numerous acquisitions of service companies during 2010 have successfully diversified our operations and sustainably reduced our dependency on internal contracts, we plan further reviews of our structure to optimise our operational efficiency and deliver margin and bottom line growth.

Opportunities for new portfolio acquisitions and insurance claims continue to look favourable.  We have already increased activity in the latter and hope to announce shortly completion of a capital partnership agreement as well as the refinancing of our Group bank facility.

Electronic and Web Communications

The Company is also proposing a resolution at the General Meeting to take advantage of rules for communications between companies, shareholders and others that came into force on 20 January 2007.  The key change made by the Companies Act is that a shareholder is assumed to have agreed to the company publishing documents and information on its website if certain conditions are met and procedures followed.  Shareholders can, however, ask for a hard copy at any time.

One of the conditions is that shareholders have resolved that the company may send or supply documents or information to members by making them available on a website.  A resolution will be proposed at the General Meeting covering all documents or information that the Company may send to Shareholders.  This includes, but is not limited to, annual accounts and reports, summary financial statements, notices of general meetings and any other documents which the Company is required to send to Shareholders under the AIM Rules or other rules the Company is subject to. 

If that resolution is passed, the Company will ask each Shareholder individually to agree that the Company may send or supply documents or information by means of a website.  The request will explain that, if the Company has not received a reply within 28 days of the request, the Shareholder will be taken to have agreed.  The request will be sent to all Shareholders, including those who have already agreed to website publication, so that in future the Company has a single regime applicable to all Shareholders.

Recommendation

The Board considers the terms of the Return of Value, adoption of the proposals regarding electronic and web communications and the resolution to be proposed at the General meeting to be in the best interests of Shareholders as a whole. Accordingly, the Board intends to unanimously recommend that Shareholders vote in favour of the resolution at the General Meeting as the Directors and their connected persons intend to do or procure that their nominee does in respect of their own beneficial holdings amounting to 26,777,077 Existing Ordinary Shares in aggregate, representing approximately 53.41 per cent. of the current issued share capital of the Company (excluding shares deemed to be held in treasury).

Expected timetable of principal events

Publishing and posting of the circular to Shareholders in respect of the Return of Value	14 September 2011
Latest time and date for receipt of forms of proxy or CREST proxy instructions for the General Meeting	10.00 a.m. on 28 September 2011
General Meeting	10.00 a.m. on 30 September 2011
Record time (for determining entitlement to E Shares and F Shares, the Capital Repayment on the E Shares and the Special Dividend on the F Shares)	5.00 p.m. on 6 October 2011
Credit CREST accounts with interim CREST entitlements in respect of Existing Ordinary Shares	7 October 2011
Existing Ordinary Shares commence trading ex-dividend	7 October 2011
Latest time and date for receipt of forms of election or USE instructions from CREST holders in respect of the Alternatives	11.00 a.m. on 17 October 2011
Court hearing to confirm the Reduction of Capital	19 October 2011
Effective date for Reduction of Capital	19 October 2011
Credit CREST accounts (with respect to the Capital Alternative), make BACS payments (with respect to the Dividend Alternative) to mandated accounts or despatch cheques in respect of the Capital Repayment on the E Shares and the Special Dividend on the F Shares	On or around 25 October 2011

Notes:

1 All references to time in this announcement are to London time unless otherwise stated.

2 The dates and times given in this announcement are based on the Company's current expectations and may be subject to change. If any of the above times or dates should change, the revised times and/or dates will be notified to Shareholders by an announcement on a Regulatory Information Service.

Further information on the Return of Value and proposals regarding electronic and web communications, together with the notice of the General Meeting at which the relevant resolution to implement the Return of Value and proposals regarding electronic and web communications will be proposed, will be set out in a circular to Shareholders which is expected to be despatched to Shareholders later today.

Copies of this announcement are, and copies of the circular to Shareholders in relation to the Return of Value and proposals regarding electronic and web communications will be, available on the Company's website at www.rqih.com.

-Ends-

Enquiries:

Randall & Quilter Investment Holdings plc	www.rqih.co.uk
Tom Booth	Tel: [phone]
Numis Securities Limited
Stuart Skinner (Nominated Adviser)	Tel: [phone]
Charles Farquhar (Broker)	Tel: [phone]
Shore Capital Stockbrokers Limited
Dru Danford / Stephane Auton	Tel: [phone]
Redleaf Communications	r&[e-mail]
Emma Kane	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..£72.2m as at 30 June 2011;

·      acquires and manages a portfolio of insurance receivables, with a carrying cost of c. £5.5m as at 30 June 2011;

·      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, manages two RITC ('run-off') syndicates and operates three MGAs.

The Group was founded by Ken Randall, Executive Chairman and Chief Executive, and Alan Quilter, Chief Operating Officer, 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.

Definitions

The following words and expressions bear the following meanings in this announcement unless the context requires otherwise.

"Alternatives"	the Dividend Alternative and the Capital Alternative, or either of them as the context may require;
"Board" or "Directors"	the directors of the Company;
"Capital Alternative"	the allotment and issue of E Shares to be cancelled pursuant to the Reduction of Capital;
"Capital Repayment"	the proposed repayment of 3.2 pence per E Share;
"Court"	the High Court of Justice in England and Wales;
"CREST"	the system for the paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear UK and Ireland Limited in accordance with the Uncertificated Securities Regulations 2001;
"Dividend Alternative"	the proposed special dividend of 3.2 pence per F Share to be declared and paid in accordance with the Dividend Alternative;
"Existing Ordinary Shares"	ordinary shares of 26/91 pence each in the capital of Randall & Quilter;
"E Shares"	the E Shares of 3.2 pence each in the capital of the Company proposed to be issued to implement the Return of Value;
"F Shares"	the F Shares of 3.2 pence each in the capital of the Company proposed to be issued to implement the Return of Value;
"General Meeting"	the General Meeting of the Company (or any adjournment thereof) to be held at the registered office of the Company at 110 Fenchurch Street, London EC3M 5JH at 10.00 a.m. on 30 September 2011;
"Group"	Randall & Quilter and its subsidiary undertakings (as defined in the Companies Act 2006);
"Return of Value"	the transactions comprising the Alternatives;
"Shareholders"	holders of Existing Ordinary Shares; and
"Special Dividend"	a special dividend of 3.2 pence per F Share to be declared and paid in accordance with the Dividend Alternative.

 

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