R&q Insurance Share Discussion Threads

[rik shaw] 28/6/2021 06:53

Slater Holdings notification this morning, so they see value here.

[red ninja] 22/6/2021 07:33

So Phoenix Asset Management have trimmed their holding by 1.466%, still the price appears to be strengthening so looks like their is demand for the shares from other big players.

[breezer_42] 04/6/2021 11:52

DBADVN,
Understood! Yes, it's certainly a big ask. I remember when they started the PM business though, the were scoffed at when they revealed their growth projections for it. Now they're arguably quite a way ahead of those "bullish" projections! So I'm in the same boat as you - I think they can pull it off.

[dbadvn] 04/6/2021 11:27

Don't know if cjac is on this board but would value his opinion if he is.

[dbadvn] 04/6/2021 11:26

breezer,
if RQIH were in the tech sector it would certainly be roaring ahead.

I think its just the belief in management ability to make the roadmap a reality that holds it back.

I hold because I think they will, and one day the market will recognise that.

[red ninja] 04/6/2021 11:19

Well in truth RQIH have cut the dividend from around 10p to 4p so they have chosen a middle path, more growth but still some dividend.

They were managing slow capital growth before the pandemic, but the cash raising at 135p in April 2020 was disappointing, but then again maybe the best option in a pandemic. The new strategy with more unsecured debt offering is less dilutive, but has other risks. I believe the loan notes interest rate rises to some degree with inflation.

[alter ego] 04/6/2021 10:55

Agree breezer_42, a static company paying steady dividends will never show any capital gain. It might suit someone who just wants income but I like my returns to come for more than one source.

[breezer_42] 04/6/2021 10:48

^ I don't understand this view. It's cheap because it's growing? Tell that to Tesla and Amazon.

It's always swallowed capital to grow, and has always done dilutive fundraises whilst paying dividends. Raising money to give it back as dividends is nonsensical and wasteful.

The difference now is that management has given us a roadmap to get out of this cycle, whereby the PM business, which will according to their guidance probably make $50m in 2023 (compared to £16m for the GROUP in 2020!) will start to pay for some of this growth.

Ignore this at your peril imo.

[dbadvn] 04/6/2021 10:32

The underlying issue is the balance between cash generation, borrowing and the ability to grow the business to scale through acquisition of closed book / run off business.

Basically for or the next few years it is going to swallow capital to grow .

Its cheap for a reason.

[red ninja] 04/6/2021 09:21

When we tipped Randall & Quilter in October 2019 we said it looked cheap on a price-to-earnings ratio of 10 and a yield of 5.2pc and speculated that some investors had shied away because of the complexity of some of its insurance operations.

Either way, regrettably, the shares have merely become cheaper still, partly because in its annual results published last month it said it would cut its dividend from next year, even though it raised the 2020 payment by 5pc to 4p. Its new policy is to pay 25pc-50pc of profits as a dividend, against last year’s 56pc.

“We think it is important to have a policy that allows for an appropriate balance of reinvestment in our business and dividends to shareholders, as well as one that minimises the need to raise external capital,” R&Q said.

Shareholders reacted by knocking 5.8pc from its market value. One, Gervais Williams of Premier Miton, said he was “disappointed and surprised” by the dividend cut.

There is cash on the balance sheet and no change in my confidence about the company’s ability to generate cash in the coming years,” he said. “Its potential has not changed one iota and we may well add to our holding at some stage.” We will hold.

[rik shaw] 04/6/2021 08:06

Questor in the Telegraph maintains HOLD recommendation after fall in price

[red ninja] 02/6/2021 10:02

I'm loving the 240p figure, but as it says on the document "Please refer to the important disclosures shown on the back page and note that this information is Non-independent and categorised as Marketing Material".

[edmonda] 02/6/2021 09:47

There is a gradual strategic shift at Randall & Quilter and FY'20 results showed rapid momentum in both divisions: Legacy made particularly strong progress / Program Management reported good growth and made a first profit.

New research note out from Equity Development with fair value at 240p/share, see:

[dubai123] 24/5/2021 13:12

It will be interesting to hear what management have to say in an hour at the investor presentation on investor meet company

[red ninja] 24/5/2021 08:27

The report says that they are hoping PMA income will bridge the gap eventually I seem to recall, but that will take some time.

ie
"We remain in the enviable position of competing in growing markets that offer us the opportunity to reinvest our capital at high rates of return, creating long term shareholder value. With significant growth opportunities in front of us, our business will continue to consume capital over the near term, particularly our Legacy Insurance business. Over time, however, we expect our Program Management business to create enough free cash flow to make us capital self-sufficient."

They are also hoping to go to a model of legacy run off for some insurance companies on a paid fee basis.

[jonwig] 24/5/2021 08:07

This_is_me - good point.

Operating cashflow is huge (£46m), but "purchase of financial assets" (ie. legacy business) is even more huge (£284m). So it has to be bridged by debt.
Will it be the same story every year?

[this_is_me] 24/5/2021 07:52

Cash flow is a lot more real than profit. Profit is for accountants, cash flow is for investors.

[jonwig] 24/5/2021 07:45

This accounting for legacy intangibles is what disturbed me a year ago. I think note 15 explains;

Intangible assets arising on acquisition are calculated by measuring the difference between the discounted and undiscounted fair value of net technical provisions acquired. These intangible assets are amortised over the estimated pattern of run-off of the net technical provisions.

It lokks like this is going to be an annual drag on profits (as opposed to operating profits) so long as there are existing and new legacy acquisitions.
I wonder whether it actually matters - if not, the share price drop is an over-reaction!

[red ninja] 24/5/2021 07:33

Well the dividend has been rebased at 4p.

Also note ""Profit Before Tax of £30.2 million, a decrease of 21%, reflecting a reduction in net intangibles due to the mix of Legacy Insurance transactions".

I'm not sure what "net intangibles" means ?

[geraldus] 24/5/2021 07:23

Market not impressed.

[geraldus] 24/5/2021 07:00

PM now in profit.Wonderful.

[jonwig] 24/5/2021 07:00

No more hefty payments, just a paltry dividend. Still, suits the expanion plans.

[this_is_me] 24/5/2021 06:24

A very promising set of results, medium term prospects are very good.

[geraldus] 21/5/2021 06:48

Non RNS today.Results Monday,would expect some movement,hopefully up.Looks neglected.