R&q Insurance Share Discussion Threads

[jonwig] 23/12/2020 17:46

Acquisition.
Is this the first time they've actually disclosed a figure?
(Or that they've bought the equity?)

[red ninja] 21/12/2020 11:55

Could be some weakness I guess, but if they are disposing of large amounts they will probably place them.

[jonwig] 21/12/2020 10:54

True.
I was thinking about the potential overhang and share price weakness.

[red ninja] 21/12/2020 09:07

Well they are retiring so not that unusual.

[jonwig] 21/12/2020 08:13

R sold shares a couple of weeks ago, now Q sells 400,000.

[petomi] 18/12/2020 11:43

edmonda thanks for the equity devt link. The funding isn't cheap but it is subordinated which always costs rather more and good for regulatory capital. I am looking for 200+ and then perhaps an exit premium on top

GLA

[jonwig] 10/12/2020 15:14

It's a very positive note, and tells us that the rate on the notes is in line with the market. It suggests a big pipeline of deals in both busines ssegments.
They forecast a FY20 fall in profits but increase in NAV, but FY21 is boosted.

topvest - respect your decision. Anyone reading this note must appreciate that it is company-sponsored.

[edmonda] 10/12/2020 13:11

Plenty of momentum lately, plus more capital raised to invest for handsome potential return. Yet shares are still at large discount to peers.

Read new analysis from Equity Development on its prospects and undervaluation here:

[topvest] 10/12/2020 10:29

I've decided to exit. I was hoping to sell at £2, but Ken Randall selling at 175p was the trigger. He's a smart cooky. I'm not sure this will be a compelling proposition after he exits. Anyway, if 175p is good enough for him, its good enough for me.
Debt funding - agreed that the coupon looks high and I just don't really get it. See point on programme management generally.
Programme Management - I just don't really understand the business model.
Legacy is a low quality one-off revenue stream. The trouble with Legacy is that 1 disastrous acquisition can bring enormous insurance liabilities if you get something wrong. Just look at how Tawa ended up!
Good luck though to those that remain. I've been here for a decade and its been a fairly successful investment pretty much 3 folding with returns of capital included.

[jonwig] 09/12/2020 16:13

Hambros have taken half a million.

[geraldus] 09/12/2020 08:07

Kenny still has 5 million shares.

[lord gnome] 08/12/2020 21:25

Yes, placing. Randall's shares would have been placed by the stockbroker and then moved through the market at the agreed price - in and out. Apologies for confusion, not a placing of new shares.

[jonwig] 08/12/2020 19:46

Lord G - placing? Any takers of the shares he sold today in the market haven't yet declared themselves. They seem to have been easily absorbed, though.

[lord gnome] 08/12/2020 18:09

Ahh. So there we have it. Placing that could explain recent price weakness. Overhang now gone so holders can look forward to recovery to new highs. Sorry to haunt the thread after I've gone, but I have bought, sold and re-bought RQIH several times previously, very profitably. GLA

[geraldus] 08/12/2020 16:11

Ken Randalls 6.5 million sale for starters.

[lord gnome] 08/12/2020 15:48

Huge turnover today. Some big trades going through. Some sizeable holdings changing hands.

[red ninja] 08/12/2020 11:03

Lord Gnome,

Good luck with your other interests. Don't blame you for selling. However, not convinced there is skulduggery at RQIH.

William Spiegel was highly recommended :-
"William has 30 years of private equity experience and has been a leading financial services growth investor since 2001. A significant part of his experience has been in building and growing insurance companies in both the U.S. and the U.K. He has, through his work in private equity, been a founding investor and/or board member of many successful insurance companies including Catlin Group, Clear Blue Insurance Group, Essent Group, Fidelis Insurance, Global Atlantic Financial Group, Lancashire Group, Montpelier Re, Narraganset Bay Insurance and Third Point Reinsurance."

He has been well re-imbursed ie over 5 million RQIH shares which vest over 3 years on certain performance points plus his salary so hopefully he will continue his success record at RQIH.

Other newly appointed management figures also seem to have good records and have been similarly incentivized hopefully it will all pay off.

[red ninja] 08/12/2020 10:51

Jonwig,

"That's the increase in Insurance contract provisions to £1.40m from £1.07m in December and £0.94m last June. It hasn't been explained."

If the value and number of contracts is increasing then shouldn't the contract provision be divided by the "total value of contracts" to see if we have an increasing trend. I mean surely there will always be some degree of contract provision.

The last capital raising price was disappointing, I believe it was below NAV, but then again maybe it was the best that can be done when you are a global pandemic. Generally I don't think the capital raisings have been at particularly good prices too close to NAV and not enough Enterprise Value in the price.

[lord gnome] 07/12/2020 21:29

Red Ninja - I voted with my feet and I won't be back. Other fish to fry. I was not happy with the equity placing and I am even less happy with this funding. Does anyone know who has provided the funds? No? Me neither.

[speedsgh] 07/12/2020 21:10

Hi Red Ninja - I wasn't replying to your post. Was only looking more closely at the issue of these notes for the first time today so was really clarifying for myself the potential rates payable. I'm afraid I can't answer your question but am not going to lose too much sleep over the notes. Only have a residual holding in RQIH these days.

[jonwig] 07/12/2020 20:45

Red - well I wasn't taking part in the criminal bit! 🙂

Only today, A M Best gave their main business an A- rating. (That's solvency-based, not debt.) So you'd think they could borrow a bit better.

So maybe what I mentioned with the last results was a factor, even though no analysts have raised it.
That's the increase in Insurance contract provisions to £1.40m from £1.07m in December and £0.94m last June. It hasn't been explained.
I think Lord G was also referring to the April Brickell shareholding at a 7% discount to the then share price.

[red ninja] 07/12/2020 20:22

Speedsgh,

I believe you misunderstand the interplay here.

I am not arguing the rate is not high we can all see that and I am not arguing the rate does not relate to perceived risk

However, the interplay between Lord Gnome, Jonwig and My Retirement Fund below implied that RQIH was paying more interest than it should be and also appeared to imply dishonesty within the management. Thus I asked well what should RQIH be paying for a company in it's risk band (presumed to be medium). Can you answer that question ?

"
jonwig 4 Dec '20 - 07:21 - 908 of 918
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Issued $107.75m of 13-yr sub notes.
The Notes will be due in December 2033 and can be called after 5 years at par. The coupon has been set at a rate of 3-month US dollar LIBOR, subject to a 0.5% floor and 2% cap, plus a margin of 6.75% for the first ten years and 8.25% thereafter. The Notes will be issued in a private placement.

That's a steep rate to pay, surely?

Debt: Equity is now around 198:394 = 50%. Is that getting a bit high?
Lord Gnome 4 Dec '20 - 07:27 - 909 of 918
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Steep? It’s effing ridiculous. They could have raised money at less than half that rate. Note that the funds are being raised in a private placement so they have almost certainly given one of their mates a very good mates rate. This is milking profits from ordinary shareholders and on £100 millions it will cost us about £3-4 millions annually. A disgrace.
My Retirement Fund 4 Dec '20 - 07:33 - 910 of 918
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Tells you everything you need to know about them really. Keep bargepole firmly in hand and find yourself a more credible listed company who's directors interests are more closely aligned with ordinary shareholders.
Lord Gnome 4 Dec '20 - 08:38 - 911 of 918
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I'm out. That was another red flag for me. I didn't like the last equity placing and now this. Looks like I am not alone. Lots of other sellers beat me to it this morning. GLA.
jonwig 4 Dec '20 - 08:40 - 912 of 918
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Lord G - probably wise: I halved my holding first thing.
There's still the possibility of a takeover, which is a big part of my strategy.
Lord Gnome 4 Dec '20 - 08:45 - 913 of 918
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Yes, jonwig. The inevitable takeover (as I see it) was also why I was holding. Having seen the last two fundraising deals however, I would not be at all surprised if the sale is also a stitch-up."

[speedsgh] 07/12/2020 17:09

"The coupon has been set at a rate of 3-month US dollar LIBOR, subject to a 0.5% floor and 2% cap, plus a margin of 6.75% for the first ten years and 8.25% thereafter."

So for the first 10 years min rate 7.25%, max rate 8.75%. Therafter min rate 8.75%, max rate 10.25%. Still sounds pretty expensive in the current ultra-low interest rate environment. Agree with jonwig that the high interest rate must be a sign of perceived risk.

[red ninja] 07/12/2020 15:20

Jonwig,

I'm not really sure what a smallish specially insurance company should pay on a unsecured debt. What would you suggest is the correct interest rate ?

I appreciate the loan has an Libor element, but it does have a 2% cap so if inflation does go high (which I hope it won't) the loan will erode at least for 5 years as after that it can be called.

Having said that it is too large in my portfolio so at some point next year I will start to trim it down especially as an increase in capital gains may be on the cards.

[jonwig] 07/12/2020 14:38

Red - the high interest rate is a sign of risk, not of dodgy dealings. And it's in part inflation-linked via the libor terms.

Personally, I argued that I was overweight here, so took half off the table.