R&q Insurance Share Discussion Threads

[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.

[speedsgh] 11/12/2018 12:01

Update on the Acquisition of GLOBAL Reinsurance Corporation of America -

Randall & Quilter Investment Holdings Ltd. ("R&Q" or "the Company") announced on 19 September 2018 that it had signed a definitive agreement to acquire GLOBAL U.S. Holdings Incorporated, the 100% parent of GLOBAL Reinsurance Corporation of America, a New York domiciled reinsurance company in run-off. The acquisition is conditional upon regulatory consent for the change of control. At the time of that announcement the Company indicated that it expected receipt of change of control approval and to complete the acquisition before the end of 2018.

The Company remains confident of achieving change of control approval of Global Re US and the Board now anticipates that regulatory approval is likely to occur early in 2019.

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".

[jonwig] 28/11/2018 06:46

The Equity Development forum is this evening. A video should appear a few days afterwards.

[lord gnome] 30/10/2018 11:18

Just noticed that the shares go ex-div (sic) at close of play today, so I guess that may also be having some effect on the share price. All things being equal, they should open 3 -4p down tomorrow.

[lord gnome] 30/10/2018 11:12

Totally impenetrable. But I can read the rising share price so I guess that those who know what it means must like it.

[jonwig] 30/10/2018 08:25

As usual, reading today's announcement needs a dictionary!
Today's offering, "facultative reinsurance":

[lord gnome] 13/10/2018 15:20

Yes, it’s notable that the biggest fallers last week were stocks that had enjoyed the biggest rises (by and large) as investors sought to lock in some profits in case of a wider downturn. I am happy to hold these but didn’t buy the dip as I have other fish to fry and seek to shuffle the pack of my holdings.
RQIH is thinly traded and prone to bounce about a bit. Over the longer term, quality will out.

[jonwig] 13/10/2018 08:44

@ Lord G - some commentators have said that the biggest fallers this week were the biggest recent risers (tech in US, etc.). So a mood of fear and lots of profit taking.

Because RQIH is pretty illiquid, you can see the reasoning. I'd no interest in buying the dip here, as I haven't been a buyer of anything recently. It looks like one to hold through a bear market though, as distressed companies will be queueing up to sell their unwanted insurance bits and bobs at well under true value.

[lord gnome] 12/10/2018 14:35

What a difference a day makes, and what a recovery. All buys today, and the price is being chased ever higher. Who knows something the rest of us don't? Have these been tipped somewhere?

[speedsgh] 12/10/2018 14:19

RQIH are presenting at Equity Development Investor Forum November 2018...

[jonwig] 12/10/2018 07:56

The ED note has an interesting description of Program Underwriting as "fronting" (p6). I always thought of fronting as illegally putting yourself down as main driver to get cheap car cover for your kids.

Anyway, this is a good explanation: