R&q Insurance Share Discussion Threads

[dangersimpson2] 07/2/2019 08:16

Discount is bigger than last placing but then the amount raised is larger this time.

I can see why they go for the certainty of a placing but the small amount of open offer does leave existing holders diluted. That said, last time the price dropped below the placing price shortly afterwards so smaller holders could pick up all they wanted at a discount to the larger holders - no guarantee that this will happen again though.

This is obviously part of their strategy to add scale, but when you know that further placings could come at a discount in the future it does rather are going to keep a lid on the price. I also don't get why they keep doing a regular return of capital, if their strategy is to scale up then giving a regular payment but taking it all back and more in a placing seems pointless. I know the market expects insurers to pay an income but think they should either go for scale and cut the payments, or run the business for cash and make regular payments.

[this_is_me] 07/2/2019 08:09

I will be voting against it. Once again institutions are being gives shares on the cheap to the detriment of ordinary shareholders. I also always vote against A.G.M. resolutions giving boards authority to issue placing shares.

I presume that this is also going to trash the dividend for a number of years.

[kevph] 07/2/2019 08:00

Yeah. Agreed. The 6.35% over Libor is a hefty premium to pay. Not much in it for PIs either.My only consolation is that RQIH clearly has ambitions and we are party to a much larger business. To raise £177m over a few months says they see a lot of profitable opportunity out there.Not sure they have gone about it the right way though.

[jonwig] 07/2/2019 07:25

Placing and open offer:



What makes me pretty angry:

1) £100m raised in the placing at a rather low 153p.

2) A mere £7m available to PIs in the open offer (1:28 basis).

3) Nowhere does it say that the o-o is at 153p. (Yes, I know it should be obvious.)

4) "On 28 December 2018 the Group raised $70m through the issuance of 10 year senior subordinated loan notes at a margin of 6.35 per cent. over the U.S. Dollar 3-month LIBOR." I missed the announcement of this. Or rather, I didn't miss it because they didn't announce it!

The placing itself seems to be done-and-dusted, so no doubt some placing shares will find their way onto the market and the share price will fall today. To anywhere near 153p? Probably not.

[lord gnome] 22/1/2019 14:43

Hopefully, speedsgh. Let's hope that good news is on the way, although this looks like a few PI buys rather than any serious buying by someone with an inside track on the news.

[speedsgh] 22/1/2019 14:27

Possibly leak of impending completion of delayed Global Re US acquisition?

from original acquisiton rns on 19/9/18:



Based on R&Q's own reserve assessment and significant operational synergies, the acquisition will generate a material gain for the Group. Should regulatory approval be received and completion occurs before the end of 2018, it is expected to result in the Group's profit for full year 2018 being substantially ahead of market expectations...

from update on 11/12/18 confirming delay in completion:



As a consequence of the applicable accounting requirements, the benefits of the acquisition will therefore now be accounted for in the first half of 2019, rather than the full year 2018. The Board's current assessment is that, as a consequence, while the Group's profit before tax for 2018 will be below current market expectations, that for 2019 will be correspondingly above current market expectations.

Ken Randall, Group Chairman and Chief Executive Officer said "We have always stressed the difficulty of predicting the exact timing of legacy deals. The acquisition of Global Re remains on track and the new business pipeline for legacy is very encouraging. Moreover, Accredited, our programme management business in the USA and Europe, continues to attract a lot of interest. By 31 December 2018, we anticipate having signed contracts with managing general agents which are expected to generate future gross written premiums of around $500m per annum. Both of the Accredited companies have a strong pipeline of further opportunities for execution in 2019. As we have previously indicated, earned commissions on programme business will begin to have a material impact on the Group's results from the second half of 2019 and beyond".

[lord gnome] 22/1/2019 10:38

And all of a sudden, as if by magic, we have a flurry of small buys which sends the price up. Any idea why? Has this been tipped by some hot tipster? Not that I'm complaining.

[alter ego] 19/12/2018 15:42

1tcm1 have you got a problem? Why anyone would take the trouble to post this nasty little attack on someone who provides a great deal of useful information to others is beyond me. You've also done so on more than one board so you clearly have an agenda.

Consider yourself filtered.

[topvest] 17/12/2018 19:53

Lord Gnome. I think that you need to understand that this business segment generates the vast majority of its profits from negative goodwill. Delay a large transaction completing and the profits are gone until next year.

[jonwig] 17/12/2018 16:18

I've enquired, and it seems the presentation by RQIH on 28/11 didn't happen, owing to illness of the presenter. It's being rescheduled for next year. (Hence no video.)

[jonwig] 17/12/2018 11:21

The 28.4p eps forecast for 2019 is pretty impressive, but not necessarily repeatable. They do like to do returns of capital, so it could show up as a nice payout.

[lord gnome] 17/12/2018 09:47

Thanks for the link Edmonda. If that all comes off as suggested, then we could be in for a pleasant 2019 - at least in this regard.

[edmonda] 17/12/2018 09:30

Forecasts shifted to simply reflect expected closure date in 2019 for Randall & Quilter's significant acquisition of Global Re.

Shares are on a low PER, and juicy yield tax free to UK private investors on forecasts in latest research note:

[jonwig] 12/12/2018 06:29

Market's struggling to price stocks at the moment. I'd say RQIH's business is pretty immune to UK problems. And stress in the US economy (it's coming) means that more companies will want rid of such baggage as captive insurers - even at knock-down prices.

[lord gnome] 11/12/2018 21:01

Whichever way you want to look at it, I missed a trading opportunity. Must confess to being slightly concerned that a delay in a single deal that was only recently announced, should lead to a profit warning. Are things really that tight?

[fenners66] 11/12/2018 20:57

So the accounting adjustment option then.

So why the market reaction ?

[topvest] 11/12/2018 20:04

Absolutely Jonwig. Those posters above, need to understand that the profits on the legacy business arises from buying assets below book value creating an immediate day 1 profit (negative goodwill). The explanation makes absolute perfect sense as the day 1 profit is just moving back a few months. R&Q is an odd business and always has been. The founders are very good at what they do though. It's obviously quite risky, so you need to know exactly what you are doing in buying these legacy portfolios!

[jonwig] 11/12/2018 19:33

fenners - I must admit I haven't looked, but a possible reason is that the acquisition books negative goodwill, where the asset costs less than its book value. (It's happened before with them, in the income statement as "goodwill on bargain purchase".)

If I'm correct, it's merely a calendar factor. The market's in a mood to find bad news everywhere.

[this_is_me] 11/12/2018 19:23

There may be a dividend/return of capital consequence in the short term, also it wouldn't be the first time that an announced delay of this sort led to a no deal result. (No deal Brexit Mrs May?)

[fenners66] 11/12/2018 18:43

They announced a planned acquisition in September
So there was going to be very little time in this year to get any return on investment.

Now it slips into 2019. But if the acquisition had been in 2018 then all of 2019 would have had the benefit anyway.

So this does not add up ...

"As a consequence of the applicable accounting requirements, the benefits of the acquisition will therefore now be accounted for in the first half of 2019, rather than the full year 2018. The Board's current assessment is that, as a consequence, while the Group's profit before tax for 2018 will be below current market expectations, that for 2019 will be correspondingly above current market expectations."


The only way I see that working is if the benefits were not as a result of running the acquired company for a few months - but as a result of some accounting adjustment merely based upon the change of ownership.

So the acquisition works only on paper and not as a source of economies of scale and ongoing profitable business ?

Or its an excuse for a profit warning - the market seems to have taken it that way....

[speedsgh] 11/12/2018 18:43

Couldn't agree more, jonwig. On the assumption that it is purely a timing issue, makes zip all difference imo.

[jonwig] 11/12/2018 12:36

Not really bothered, so long as it does drop into next year (and not into landfill).

The ED presentation video isn't up yet. (Some others are from the 28th.)

[lord gnome] 11/12/2018 12:34

I was only thinking just the other day that this was holding up well against the market. I seriously thought of selling out to take advantage of bargain prices elsewhere.
Even as I was trying to get a quote to sell, I was watching the prices drop on L2. Not that I could have sold out anyway as the online quotes had been nailed down and selling for anything more than a thimble full of shares was At Best only or trying for Fill/Kill.
Ho hum. I'll never get rich playing this game.