R&q Insurance Share Discussion Threads

[adam] 11/3/2011 16:15

I thought they bought run-off insurance, i.e. captive insurance.



Controlled Risk and Return

Randall & Quilter is a leader in the management of insurance companies and syndicates in run-off and of captive (re-)insurers and in negotiating the purchase of companies in run-off.


Randall & Quilter Investment Holdings ("R&Q") is one of the leaders in, and one of the creators of, a highly specialised niche in the global (re)insurance market. In the three years since the IPO it has developed and/or acquired specialisations in adjacent niches, broadening the range of services it provides.
We expect it to out-perform the market in the short term but it should not be viewed as a short-term investment. The rewards from its superior claims management and administration skills accrue progressively over a period of years rather than months. So we are more confident about long-term performance which will be less affected by swings in market sentiment or the sterling exchange rate.
R&Q is a lower-risk business than other non-life (re)insurers because (apart from the new Lloyds turnkey syndicate) all its insurance business relates to the past, so it is almost unaffected by future hurricanes and other natural or man-made catastrophes. Although it now has a small and very limited exposure to risks from future events through its investment in the Lloyd‟s syndicate, the principal risk to which it is exposed is that real interest rates remain below zero for a prolonged period.
The current share price of 91p puts them on a discount of 38% to NAV (and over 10% to net tangible assets), a multiple of 9x current year earnings, and only 6.7x forecast eps for 2011, and a yield of more than 8%.
R&Q is a long-term growth company with a below-average PFER and above-average yield, so we consider it to be undervalued (see Valuation section).
Our estimate of a fair price currently and hence our short/medium-term target for the shares is 146p, a 60% premium to the current price, at which level the yield would still be 5%.

[ydderf] 11/3/2011 15:11

chart looks spikey after the investors chronicle inspired run-up. the japanese tsunami causing insurers to take a dive is probably not helping, no hurry to buy above 100p i would have thought.......

[labatie] 09/3/2011 11:44

108p for 5/-.

[azalea] 07/3/2011 09:33

Not to worry, all buys this morning suggests that at the end of the day investors at this level are going to make money.

[this_is_me] 07/3/2011 08:38

After the B share issue you still own the same percentage of the company as you did before so your shareholding has not in any real sense changed. If you can't understand that you should not be investing at all. The whole thing is about the difference between higher rate tax of 40% and CGT of 18%.

[this_is_me] 07/3/2011 08:19

misleading

[labatie] 07/3/2011 08:12

You're not actually answering my point

[envirovision] 07/3/2011 08:01

If you read the post you would have realised I was trying to work out on what substance the alleged dividend yield was coming from since that seems quite possibly miss leading. Certainly in the normal sense of what I and most people would generally term to be a dividend.

[labatie] 07/3/2011 07:35

Why does he still hold shares in a company he evidently believes has defrauded him?

[red ninja] 06/3/2011 14:26

Azalea

Envirovision appears to believe he has been cheated by RQIH management and no one can convince him otherwise.

[azalea] 06/3/2011 10:37

Whilst I do not believe that directors have bought 237,000 shares this past year on a whim, only time will tell.

[envirovision] 06/3/2011 10:18

Well there is nothing in the last report which says they have any intention of paying a normal dividend. They were however keen to champion the B share scheme and share Capital Consolidation arrangement and talked about it in their last half yearly report in a manner as if it was something they expected to continue with.

Not sure if you can really call this prospective yield, very miss leading if you can IMO. I don't know, I mean I have the same sharescope data you have which is based on the house brokers data. I cant imagine the company would have told the house broker they planned on paying a dividend if they had not also mentioned it to the shareholders.

Maybe the house broker feels it is legal to call such an arrangement a "prospective yield"

If so, crazy really since for normal shareholders, as the last experience proves, not only do you end up with less shares, you end up worse off and it end up costing you!

Prospective yield, cheek more like prospective negative yield.

[envirovision] 05/3/2011 23:12

I read that, had to laugh, with respect. Their most prized tipster only pushed these a few weeks ago as one of his yearly value picks so they are hardly going to change their minds are they. In the space of a few weeks are they? I think not.

Wonder where they got the prospective yield of 7.8% from though? Sounds like a lack of research there, since there is no promise or commitment to paying any kind of dividend to that value, certainly not in cash.

[azalea] 05/3/2011 12:40

Friday's IC, backs up S.Thompson's buy recc (11/2/11)with its own, citing non execs buying a combined 142k of shares, a prospective yield of 7.8% and a modest forward PE ratio of 10. A portfolio of nine insurance companies in run off,with net assets of £75m. "This business offers significant potential, with the market in the UK alone worth around £30bn). The group is also approved by Lloyd's of London to provide a turnkey management services to anyone wishing to set up their own underwriting syndicate.

[red ninja] 24/2/2011 16:35

Lehman brothers in administration still selling in the market presumably to repay for some of the excesses of the recent past ..

Still when the sellers are out ....

[labatie] 24/2/2011 09:05

Envirovision

And if you'd waited until Tuesday to sell the majority of your holding(post of 18/02)you'd have got up to 107p.

So what?

Can't we stop this arid discussion?

[lord gnome] 24/2/2011 07:38

Strong Director buying! We're not expecting bad news then. Was yesterday's price drop on a bad day for the market massaged down to accommodate them? I wouldn't mind a few more if I could get them now at 98p.

[envirovision] 20/2/2011 22:33

You can disagree all you like. However at the end of the day you end up with less shares.

A normal company would declare a dividend, sure the share price might drop a few pence for a number of weeks after XD, but assuming the company is generating cash, would recover that loss in good time for the next dividend declaration. Infact some would give you the option of "EXTRA" shares instead of payment i.e. scrip.

Instead, here one ends up with a payment and less shares, the payment not even a premium to market price. In my case a payment of £169.96 and a deduction of 188 shares or about 90p per share.

Had this ridiculous event which was purported as return of capital payment not occurred, I could have sold those 188 shares last Friday and got £188 instead.

All I am saying really is that it is no way in which to reward shareholders. I accept for some reasons of your own preference you may be happy with such an arrangement, I'm afraid I am not. If you want to try to believe your somehow better off with such an odd arrangement, then fine no problem.

What I am saying is that I prefer companies which pay real dividends or issue shares as scrip or offer a genuine tender at NAV. I'm not getting hot under the collar, its simply a personal choice, that is all.

[adam] 20/2/2011 16:09

Adam that is fine, but brings no benefit to shareholders

What doesn't?


1) The return of capital? It returns some cash to you that the company had. A dividend, which you could have in income form or capital form depending on your predilection and election.

2) The share reorganisation? Agreed no benefits ensue, neither does any harm. It is purely "optical".

The shares are trading at a discount to fair value but the return of capital and the reorganisation are incidental. You are getting hot under the collar over nothing.

[envirovision] 20/2/2011 14:10

Adam that is fine, but brings no benefit to shareholders. If it was making a tender at NAV for shares then maybe it would have been fair. For example I have a holding of PEQ the trade at £1.70 and the company have just returned £223.83 pence per share which is the NAV at the time by way of a tender offer. It may continue to do this until it would expect to wind itself up.

However with a company that has no intention of winding itself up, nor realising NAV and as you can see, the reality is you end up gaining nothing but indeed losing more if the shareprice rises, its stupid thing to do.

[adam] 20/2/2011 12:00

If a company has 100m shares in issue and £10m in the bank, it has a NAV of 10p/share. Let's say it trades at 10p/share. It then issues 50m "B" shares to shareholders and buys them back at 10p. It now has £5m in the bank. The share price would dive to approximately 5p to reflect the reduction in NAV and return of value to shareholders.

All that RQIH did was to alter the number of shares in issue to, in this example, 50m instead of 100m (Obviously I have picked big numbers to highlight the point).

That way the reduction of capital does not reflect in the share price. (i.e. 50m shares with NAV of £5m). Fundamentally all that has happened is that they have returned capital and the rest is just optical. Nothing has been stolen from you. It might be of course that the quoted market price does not reflect these underlying changes properly, but then that is the whole point of the stock market, to look for anomalies in valuation. IF you think they are cheap, you buy, if they are too dear, you sell.

[envirovision] 20/2/2011 10:44

Adam on paper you could pretend its not, however the reality is different. All shares have a nominal value, but it has little to do with the overall market value of ones holdings. It is simply an equity adjustment in the companies accounts and that is all it is.

Perhaps you may wish to read my Posts 43 and 45 which deal with the reality of what happened when one held the shares during such a reorganisation.

I note the share price has risen since this happened. The reality of the loss which I suffered has infact therefore been compounded further. Since the company took away some of my shares, the missing percentage of my holding has failed to take part in the increase in equity value over the last week.

Had the company not taken away my shares, they would have participated in the recent rally.

To be frank I am amazed how some people find it hard to understand.

Perhaps this is also why some of the larger holders have been so keen to reduce their holdings?