R&q Insurance Share Discussion Threads

[red ninja] 14/11/2021 14:35

Randall (now retired) and Quilter are regarded as leading lights in the legacy run off sector and they have directed the company into it's 2 current sectors so credit to them.

However, William Spiegel the new chairman does seem very impressive and he is making more dynamic change for the company eg automating parts of the runoff to improve scalability. Thus, I see William Spiegel as a new broom updating processes and structures much more dynamically than Randall did and hopefully leading RQIH to many years of high growth in Program Management and legacy run off.

Time will tell ...

[simon gordon] 14/11/2021 13:44

Suppose it highlights how slow off the mark RQIH have been, sort of stuck in their old model, a newbie comes in and gets ahead of the dinosaur. I read in one of the broker notes that Mr Spiegel wants to foster a more entrepreneurial culture.

I saw Legacy won an industry award in Europe last week.

[red ninja] 14/11/2021 12:39

There is nothing new under the sun I guess.

However, RQIH are supposed to be one of the leaders or even the leader in legacy run off.

In the podcast I believe William Spiegel says in the legacy run off there are about 10 other companies and presumably there are plenty of other companies in program management.

However, both markets seem to be large and growing so plenty for RQIH to go for.

[simon gordon] 14/11/2021 11:05

It looks like these guys, only incorporated in 2017, brought the 1st sidecar to the market:

Premia Expands Reinsurance Capacity with Elevation Re Formation

December 31, 2020

PEMBROKE, Bermuda–(BUSINESS WIRE)–Premia Holdings Ltd. (“Premia”) today announced the formation of Elevation Re (SPC) Ltd. (“Elevation Re”), a sidecar vehicle which will provide collateralized reinsurance support for Premia’s activities in the global P&C run-off market.

This arrangement enables Premia to support run-off reinsurance opportunities with additional capacity and allows investors in Elevation Re to participate alongside Premia in the rapidly-expanding P&C run-off market through a unique and innovative structure. Elevation Re, a newly formed segregated portfolio company that has been licensed by the Cayman Islands Monetary Authority, has raised over $265 million in initial commitments from third-party institutional investors.

Bill O’Farrell, Chief Executive Officer of Premia, said:

“I am very pleased that leading institutional investors quickly grasped that the outstanding team we have assembled, coupled with the track record we have achieved over the last four years, makes Elevation Re a compelling investment opportunity. This transaction brings our total managed capital to over $900 million and we look forward to deploying this capacity into thoughtful solutions for our clients.”

TigerRisk Capital Markets & Advisory acted as exclusive structuring and placement agent on the transaction. Sidley Austin LLP and Conyers Dill & Pearman acted as deal counsel and Mayer Brown LLP acted as legal counsel for the investors.

About Premia

Premia Holdings Ltd. is an insurance and reinsurance group with operations in Bermuda, the U.S., the U.K., and Europe that is focused on sourcing, structuring and servicing business in the global property and casualty run-off market. With over $900 million in managed capital, Premia is well equipped to execute acquisitions and reinsurance transactions in the global P&C run-off market. Premia was launched in 2017 as a run-off specialist and was sponsored by Arch Capital Group Ltd. and Kelso & Company.

[red ninja] 13/11/2021 14:30

Simon,
There is a question of what I would like and what the market would support.
If it went for takeover immediately, I would hope for a minimum of £2.50, based on the last Barclays target of £2.35 and Equity Development's recent £2.40 valuation, but really I would hope Mr Spieigal and team would have time to work their plan.

In 5 years time I would hope if things go well we would be talking about a minimum of £4.

However, really in reality I would hope in the years to come RQIH could become a multi-bagger. I was lucky enough to invest in Sigma Capital at 12p when it changed to investing in rental properties and in time became an asset manager of property funds. Sigma Capital was taken out at £2.02. I think that took about 12 years.

Then again maybe I am just deluded.

[simon gordon] 13/11/2021 13:39

Ninja,

If it gets taken out what sort of price do you think it'd go for and if it's stays independent where do you envisage the share price in five years time?

Cheers!

[red ninja] 13/11/2021 11:16

It's always been a danger that RQIH will get taken out before it lives up to it's potential for investors.

I'm not sure if Bricknell or Phoenix would be the predators if it came to that though as they have both sold stock in 2021. However, they could act as facilitators of a takeover bid.

Main shareholders page shows Bricknell and Phoenix have 31.77% between them not a knock out blow for a takeover.

[boozey] 12/11/2021 23:27

Very interesting post Simon thank you. Keep posting!

[alter ego] 12/11/2021 22:33

Thx for that Simon

[simon gordon] 12/11/2021 19:15

Reinsurance News - 12/11/21:

R&Q seeks to add takeover provisions to bye-laws, sparking rumours

Randall & Quilter Investment Holdings Ltd. (R&Q), the non-life legacy and run-off insurance, programme management and investments specialist, is seeking shareholder approval to amend its Bye-laws to add certain takeover provisions that it says will protect shareholders.

It’s particularly interesting, as it has sparked discussion among sources that R&Q has been subject to a range of rumoured discussions, from acquisition attempts to taking on new private investors and that this could be linked.

This move to add shareholder protections to its Bye-laws, in case of a takeover attempt, may suggest there is perhaps something to them.

Randall & Quilter (R&Q) explained in a shareholder letter that detailing a proposed amendment to the company’s bye-laws that, “By virtue of its status as a Bermuda incorporated company and therefore being subject to Bermuda law, the UK Takeover Code does not apply to the Company. Since Bermuda law does not contain any provisions similar to those applicable in the UK which are designed to regulate the way in which takeovers are conducted, the Board is seeking authority to make amendments to the Company’s Bye-Laws to incorporate certain takeover related provisions.”

A general meeting is to be held on December 1st at which R&Q will seek shareholder agreement to the changes.

R&Q said that its new strategy is “garnering interest from new investors” and that its Board has already had discussions with third parties relating to possible combinations and/or mergers with R&Q.

With some of those conversations being focused on “transactions which might involve investments in, or acquisitions of control of, R&Q.”

“To date, such discussions have been exploratory in nature and have not materialised into a bona fide and/or attractive offer for all or part of the Company,” R&Q said.

R&Q is not subject to the UK Takeover Code, which means that “there are limited takeover style protections for Shareholders,” it said.

“The Board of R&Q is not currently evaluating any such transactions,” the company explained

But added that, hence, “The Board considers that it is an appropriate time to propose to Shareholders that the Company’s Bye-laws are amended by inserting a new Bye-law which contains a degree of minority shareholder takeover protection,” R&Q’s shareholder letter explains.

All of which sounds like a prudent move to make for any company looking to protect its shareholders, but especially so for a company that might be expecting a more serious takeover offer to be made.

Back to those market rumours.

Sources said two of the current major shareholders in R&Q would be possible suspects for any takeover approach, with 777 Partners through its Brickell investment vehicle and Phoenix Asset Management said to be potential candidates.

Of course, there are also plenty of other legacy and run-off specialists that might find R&Q an attractive target, to remove competition from the market and to boost their own platforms. Not to mention sector specialist investors, such as Hudson Structured which previously had a stake in R&Q, or some of the re/insurance focused pension plan investors of the world.

In addition, there are private equity houses that could find R&Q’s capital light and origination focused strategy, across legacy and program business, an appealing investment prospect.

But, it could just be a move to secure the necessary protections, in case of any approach.

Or it could be that the approaches already made are viewed as likely to become more serious in time.

We will, of course, update you should anything concrete come to light.

[red ninja] 11/11/2021 20:03

I see RQIH has had some exposure in the IC 6th Sept 2021 (it's free to view):-

Randall & Quilter (Reborn)
The insurer’s pivot to a fee-based earnings model has found a linchpin
September 6, 2021
By Alex Newman

Launch of ‘sidecar’ vehicle to reduce capital strain

Executive chairman says profits could hit $90m by 2023

By this point, Randall & Quilter (RQIH) has proved itself to be a canny buyer-manager of back book insurance businesses. This has been reflected in a total share price return of 89 per cent over five years, well ahead of the FTSE All-Share and 20 percentage points up on MSCI’s World Insurance index.

But if there’s one gripe with R&Q’s business model, it is the need to repeatedly seek fresh funds to finance the purchase of unwanted insurance books in run-off.

Getting this cash hasn’t been a problem – investors were tapped for equity injections twice in 2017, at 117p and 129p, and again in 2019, when management raised £107m at 153p per share – but the price has been dilution, lots of one-off arrangement fees and a drain on management time.

To address this, R&Q wants to become a more fee-based business, thereby reducing the strain on capital, and providing a more consistent earnings profile. Half-year results marked one large step in that direction with the tandem launch of Gibson Re, a vehicle backed with $300m (£217m) of third-party capital that will reinsure 80 per cent of new transactions for the next three years.

In return, R&Q will receive annual recurring fees of 4.25 per cent of Gibson’s reserves, plus potential performance bonuses, for at least six years. Assuming all capital is deployed, executive chairman William Spiegel thinks Gibson’s run-rate pre-tax operating profits can exceed $90m by 2023.

Analysts at Numis, who expect fully diluted operating earnings of 4.6p per share this year and 8.3p and 19.1p in 2022 and 2023, said the speed and scale of the pivot to asset management had “exceeded our expectations”. We’d tend to agree, especially if the market starts to value the business against earnings, in line with other asset managers. Buy.

Last IC View: Buy, 162.5p, 14 Oct 2020

[simon gordon] 11/11/2021 09:49

Oops! Have changed it to 2020.

[red ninja] 11/11/2021 09:45

An interesting article, but it is old news ie it is 9 September 2020.

[simon gordon] 11/11/2021 07:58

Bit on Patrick Rastielllo who is in London this week to meet the UK team for the 1st time in person:

The Insurer - 9/9/20

R&Q names Aon’s Rastiello to lead US E&S push

Randall & Quilter Investment Holdings (R&Q) has named former Aon Re executive and industry veteran Patrick Rastiello as CEO of its newly established US Excess & Surplus (E&S) program management business, Accredited Specialty Insurance Company (ASIC).

Rastiello brings 40 years of experience in the insurance market, with a particular focus on working with MGAs and programs.

He joins R&Q from Aon Reinsurance where for the last 10 years he was executive managing director, founder and leader of its MGA/Program Practice Group.

In total, Rastiello was with Aon for 23 years and is known as a leading authority on the program management and MGA sector. During his time with the global broker he launched the Ignition Forum, a major gathering for US MGAs.

Prior to Aon, he has held reinsurance and program underwriting roles both in London and the US for 17 years.

Based in Boston, he will work closely with Todd Campbell, president and CEO of Accredited Surety and Casualty Company, R&Q’s US admitted market program management company. The existing US admitted platform combined with Accredited’s European platform recently reached a milestone of over $1bn of contracted GWPs.

The senior hire comes as the London-listed run-off acquirer and fronting specialist gears up for an accelerated entry into the US E&S program market, a move welcomed by investors and analysts alike as opening up another potential avenue for significant growth for the firm.

As guided in its recent investor statement, R&Q brought forward Accredited’s planned entry into the US E&S program market to the fourth quarter of 2020.

The Insurer understands R&Q will separately capitalise a US E&S carrier that will be headquartered in Arizona. Scottsdale, Arizona is a recognised nationwide hub for the fast-growing sector.

Rastiello is the latest high-profile move by R&Q which in April raised $100mn in an equity placing backed by Miami investment firm 777 Partners and Hudson Structured, the Bermuda based ILS investor founded by the former Goldman Sachs head of global structured finance, Michael Millette.

The legacy and program management specialist recently added Bank of America investment banker Thomas Solomon as CFO while formerPine Brook co-founder William Spiegel joined the firm in January as executive director and deputy group chairman. Spiegel will succeed R&Q co-founder Ken Randall as executive chairman when he retires next year.

Commenting on the appointment, Alan Quilter, R&Q Group CEO, said: “We continue to be excited by the progress in our program management business and are pleased to welcome Pat as CEO of what will be our E&S program manager, Accredited Specialty Insurance Company. We are on track for its launch later this year, completing our strategic objective of establishing Accredited as a comprehensive program management solutions provider in all its major markets. I look forward to Pat joining and leading the growth of our E&S program offering.”

Spiegel noted that Rastiello is an “excellent addition” to R&Q’s senior management team and has an “outstanding track record” of building and growing Aon’s program businesses making him a natural choice to lead ASIC.

“I am confident that Pat’s knowledge of the E&S market as well as his long and deep relationships with the MGA community will bring significant value to ASIC. I look forward to Pat joining R&Q and working closely with him,” Spiegel continued.

Rastiello, also commented: “Accredited is a business I know well, and I’ve been impressed with how successfully the team has rapidly established a leading program manager in the US.

“The opportunity to create a meaningful E&S business as part of the Accredited platform is compelling. R&Q is an ambitious specialty insurance company with significant momentum, and I am excited to be joining its highly qualified leadership team.”

[simon gordon] 10/11/2021 14:20

North American leadership in London this week:

William Spiegel - 9/11/21

I’m excited to be on my way to London with Thomas Solomon, Patrick Rastiello, Marney Emel and Michele Briggs. I haven’t made the trip across the Atlantic since before the pandemic began, and some of us haven’t been to London as part of R&Q. We’ve been looking forward to travelling again and reconnecting with our great Randall & Quilter Investment Holdings Ltd. team in the UK.

Over the next five days we will be meeting with colleagues, clients and shareholders, and on Thursday we will be holding an all-employee reception. Above all we want to say thank you to our UK staff who have worked so hard over the last nearly two years, and each day there will be a ‘get to know you’ event in our London office to chat and spend time with all the different teams.

[simon gordon] 09/11/2021 18:15

Was listening to The Voice of Insurance podcast with William Siegal again today. I thought the description to go with the podcast the best written explanation of the bull case for RQIH I've seen. It's copied below.

If RQIH could get to $4bn GWP for Program in 2027 and have three side cars running in Legacy that would equate to around $350m of fee income, the 2023 target is $140m fee income ($90m PBT). Does anyone know if they would have the capital base, by using invested profits, to hit that sort of mark in '27?

The Voice of Insurace - 12/10/21:

William Spiegel Executive Chairman R&Q: Prospering as the insurance ecosystem comes apart

It’s a long time since legacy was a dusty dead end of the insurance industry where old underwriters went to eke out the remains of their days before retirement.

And at the same time it’s been a long time since the era when fronting was seen as a bit of a dirty secret of the industry.

These days both segments have matured and taken up their rightful place in the insurance ecosystem.

But it’s rare to meet someone so well qualified and quite so dynamic driving a business that is in both of these spaces.

William Spiegel the Executive Chairman of R&Q is someone with an impeccable resumé as an investor in some blue-chip start-ups in our sector over the past two decades.

And because of that he brings a fresh and very insightful perspective to our industry.

I was really interested to find out why someone like him has decided to come and work on the inside of a mature business at this time.

The answers are all here in the podcast as William describes two fascinating and uncorrelated high-growth profitable business opportunities in our sector.

William is full of energy and drive and it runs all the way through the podcast.

I never thought these segments could sound exciting but William tells a compelling story and the combination of his ruthless business logic and his infectious enthusiasm is a winning one.

[red ninja] 28/10/2021 11:45

Yes, it's the move to bringing in 3rd party capital in Gibson Re, generating recurring revenue and becoming in effect an asset manager which appears to have triggered the recent re-rating of RQIH.

Admittedly the Program Management side was already looking good.

[geraldus] 28/10/2021 11:39

Slater now up over 8%.Lovely ride in the combination.

[simon gordon] 26/10/2021 16:52

Gervais Williams on Directors Talk - 16/9/21:

Question: Finally, are there any companies that you’d point investors to look at in terms of growth opportunities?

Answer: I think there’s plenty of opportunities of companies which are well positioned to continue to expand, the question mark comes about regarding the global economy and with the cost of increases of taxes, with the inflationary bottleneck and with the constraints on the ability to recruit staff. We are in a position where it’s quite difficult to find companies which are going to grow sustainably at a time when there’s so many challenges.

One I would highlight which is a company we’ve had a holding in for many years, a company called Randall and Quilter Investment Holdings Ltd (LON:RQIH) and this is a company which is involved in Lloyds. Specifically what it does is it helps companies which are new to the insurance market get access to the market, if you want to sell in America for example, you have to sell to the regulations of each individual US state, and they’re all different, and it takes ages to get the approvals. Now, they’ve got an agreement with all the different states, they can put this insurance through their network if they’re happy with the service levels and the cost of this. and they’ve been expanding very rapidly in this area.

They’ve also got a similar network in Europe because it’s partly EU and part non-EU so it’s one of the leading companies in the world in this area and it’s got great momentum in terms of customer recruitment.

It takes a little while for the cash to come through, but coming through in the next three years, we expect the cash generation on that part of the business to be very substantial and that will ultimately not just drive growth in terms of top line, but also cash and the ability of the company to start growing its dividend. Randall & Quilter has reset its dividend at a lower level, but going forward, we think the dividend could grow very considerably and that’s the kind of company which hopefully will grow irrespective of what happens in terms of fluctuations of global economy.

[simon gordon] 23/10/2021 20:37

The Insurer - 26/8/21:

Accredited enjoys the fruits of buoyant program market but lays credit to years of patience and back-office build-out

The rapid expansion of the US fronting and program management sector over the past 12-18 months has been a positive feature of the P&C industry at a time of Covid gloom.

And market insiders are confident the momentum will continue as both positive sector and cyclical trends combine.

This includes Alan Quilter, the CEO of Randall & Quilter (R&Q) and the man who has overseen the group’s march into the fronting and program markets over the past four years.

A recent filing from the London-listed company evidences a year of stellar expansion.

As of 30 June 2020, Accredited had 36 separate programs on its books. A year on and the total is 60. Another strong month in July took the total to 67, the company revealed recently. Contracted premiums – the business R&Q’s operating subsidiaries expect to underwrite on behalf of its MGA counterparties – climbed 74 percent to $1.6bn at H1 2021.

The last 12 month’s numbers are clearly impressive. We begin by asking what is creating this accelerating momentum?

“As ever, it’s a combination of factors,” replies Quilter. First, there are the sector trends of MGAs being a fast-growing and innovative part of the insurance market. However, to grow they require a program partner to provide the licensed capacity. Then there is the fact that reinsurers increasingly see MGAs as the best way to access insurance directly from the source and prevent disintermediation from insurers. The two groups need each other but require a program partner to connect and conduct business.

Quilter continues: “MGAs have also long been a home for entrepreneurs and they need reliable capacity and reliable program partners. But then we also have the cyclical trends. Capacity is generally tightened, rates and terms are generally higher. In these cases entrepreneurial MGAs need paper providers they can rely upon. The independent program companies do not go in and out of the market like insurance companies that offer paper as an accommodation. Rather, offering capacity is our core business and we are therefore steady partners for the MGAs and reinsurers.

“What is important to note, however, is that while Accredited has enjoyed a strong 12-18 months, this recent success is actually built on years of patience and prudence in building out our platform.”

Accredited is the brand name for R&Q’s program arm, which operates fronting operations for MGAs in both the US and Europe (EU as well as the UK).

Quilter points out that R&Q first made the strategic decision to enter the space in 2017, using its already established A- rated capacity and back-office resources at a time when many existing providers were exiting.

“Our shareholders have been patient in our roll-out, supporting a number of fundraises as we invest in our capacity to service a sector which has been poorly served in recent years. It is not a quick success story. Accredited turned cash flow positive in 2020 – but it has taken us four years to get to this position. It is the reward for patience and long-term investing.”

And behind every transaction, points out Quilter, is a large back office of audit, compliance, claims and underwriting support.

“At a group level we have 20+ actuaries, for example, who can model the underwriting assumption of every proposal that an MGA or their brokers bring to us. For every 10 proposals, we typically accept two to three. Most are discarded either because we do not agree with their assumptions or are uncomfortable with other aspects of the business.”

Is he confident that some of the newer entrants to the market in recent years have the same exacting standards?

“No, I’m not. There are of course competitors we have the utmost respect for and who are helping what has become an essential market develop but when you see an MGA that we have rejected then pop up with a new fronting facility supported by a newly arrived, private equity-backed fronter, one can’t help but wonder whether sufficient due diligence has been conducted.”

Quilter caveats his comments, however. “Please don’t misconstrue. Overall, the sector is professional and is doing a necessary job. ”It’s also natural to be sceptical of competitor behaviour – I’ve been in the industry for 50 years and it is always been marked by fierce competition, whether it’s program management, legacy [R&Q’s other arm], broking or open market underwriting.”

What does Quilter mean by a “necessary job”?

“It is why R&Q entered the space in 2017-18 in the first place,” he replies.

“What we saw was a market in dislocation. On the one hand, companies such as AmTrust, AIG and QBE – the then giants of program management in the US – were scaling back after poor underwriting while in Europe there had been a series of embarrassing business failures, focused around Gibraltar and Denmark.

“The upshot is that this left a number of decent, well-run MGAs struggling with fronting capacity but it also coincided with a new trend – namely the insurtech revolution. We could see that innovation and entrepreneurship was attracting new MGAs and also reinsurance capacity but there was a lack of program capacity support that could bridge the two and provide licensed paper, claims and underwriting support. ”We could see the market need but crucially, we also had what the market needed – namely strong rating capacity, good relationships with regulators and decades of experience in dealing with underwriting and claims,” Quilter continues.

“What we must avoid is the sector enduring another wave of disorderly exits – which is why it is so important Accredited and its competitors maintain the highest standards of corporate governance.”

The sector is also continuing to grow. R&Q points to research produced by Conning which shows gross premiums written by “independent” US MGAs have grown by 10 percent per annum on average over the past five years – twice as fast as the underlying P&C sector.

At the same time, reinsurers are continuing to show a hunger for supporting MGAs, enabling them to access business without (directly, at least) competing with their potential customers.

“We calculate that the global MGA market is $100bn when calculated on premiums, with more than half – say $60bn – in the US. However, only 10 percent or so is probably genuinely independent, with the remainder controlled in some form by a primary carrier. It is the independents, however, where the innovation and entrepreneurship is taking place and it is they who we aim to support.”

[red ninja] 17/10/2021 12:17

R and Q Accredited (RQIH subsiduary) partners with Corvus Insurance :-


Corvus Partners with Program Management Solution Provider R&Q Accredited
Corvus is excited to partner with leading program management solution provider R&Q Accredited for this program, backed by a panel of A+ rated reinsurers alongside Corvus Reinsurance Company.

“Corvus has demonstrated they are leaders in innovative underwriting practices through their success in Cyber and other lines of business. R&Q Accredited is pleased to partner with the team to extend the set of offerings to the financial institutions segment. With a growing pipeline of new partnerships, we are excited to deliver on our mission to be the program underwriter of choice for US MGAs, MGUs, program owners and their capital partners,” said Dawn H. Puro, Chief Underwriting Officer, Casualty of R&Q Accredited America.

[simon gordon] 16/10/2021 18:23

Volume on the quarterly chart indicating a major change in story and buyers buying into it.

Executive Chairman and CFO with serious skin in the game and deep knowledge of the US scene and on boarding more top talent, indicate a potential trend change after the share going nowhere for 14 years.


free stock charts from uk.advfn.com

[geraldus] 15/10/2021 15:27

1.5 mill buy gone through,Slater adding?

[geraldus] 15/10/2021 12:12

Impressive interview.On a mission.

[red ninja] 14/10/2021 09:20

William Spiegel on the Voice Of Insurance podcast :-



Note, there is an advert at the start which you can just click past.

Gives good insight to how Spiegel met Randall and Quilter and how Spiegel sees the business developing.
Spiegel sounds impressive. All IMO.