R&q Insurance Share Discussion Threads

[simon gordon] 09/12/2021 12:10

Morningstar - 9/12/21:

BARCLAYS RAISES RANDALL & QUILTER TARGET TO 267 (245) PENCE - 'OVERWEIGHT'

[simon gordon] 08/12/2021 10:37

Artemis:

What are insurance-linked securities (or ILS)?

Insurance linked securities, or ILS, are essentially financial instruments which are sold to investors and whose value is affected by an insured loss event. The term insurance-linked security (ILS) encompasses the ILS asset class, which consists of catastrophe bonds, collateralized reinsurance instruments and other forms of risk-linked securitization.

Insurance-linked securities (ILS) are investment assets generally thought to have little to no correlation with the wider financial markets as their value is linked to insurance-related, non-financial risks such as natural disasters, other insurable specialty risks and life and health insurance risks including mortality or longevity.

As securities, some insurance-linked securities (mainly catastrophe bonds) can be and are traded among investors and on the secondary-market.

They allow insurance and reinsurance carriers to transfer risk to the capital markets and raise capital or capacity. They also allow life insurers to release the value in their policies by packaging them up and issuing them as asset-backed notes.

The market for insurance-linked securities (ILS) emerged in the mid-1990’s as a mechanism for insurance and reinsurance companies to access the deepest and most liquid pool of capital available, the global capital markets.

Now an established alternative asset class, insurance-linked securities (ILS) are typically invested in by large institutional investors such as pension funds, sovereign wealth funds, multi-asset investment firms and funds, endowments, as well as some family office investors.

As well as forming part of the spectrum of pure reinsurance risk transfer tools available to the global insurance market, insurance-linked securities (ILS) are also used by some large corporates to access insurance capacity from the capital markets, as well as by governments to secure disaster risk financing.

[alter ego] 08/12/2021 07:53

rns today

"William Spiegel, Executive Group Chairman, commented: "We are pleased to report another strong quarter of growth in our Program Management business. Our pipeline of opportunities remains robust, and we remain focused on developing strategic partnerships with leading MGAs, highly-rated reinsurers and the ILS markets in both Europe and the US."

[simon gordon] 06/12/2021 14:25

Profile in the WSJ Private Equity Pro from 2012:

RISING STAR: Pine Brook's Spiegel Proves That Nice Guys Can Finish First

Laura Kreutzer November 26, 2012

William Spiegel learned the importance of hard work early in his life.

"My dad [would say]: 'If you ever find yourself in a situation with your job that you have completed your task and you have nothing more to do, go find a broom and sweep,' " said the 50-year-old managing director at Pine Brook, a New York-based firm focused on midmarket investments in financial services and energy.

That work ethic, combined with an affability he attributes partly to his Canadian heritage, often helped Mr. Spiegel win over not only his own colleagues to his investment ideas but also management teams and other investors. "He's got an incredible sense of energy and an incredible desire to learn and move things forward," said Howard Newman, the firm's president and chief executive, who jokingly compared Mr. Spiegel to the Energizer Bunny. Mr. Newman adds that those qualities are important to a firm like Pine Brook, which often commits hundreds of millions of dollars to create a company from scratch.

Back in early 2007, for example, Mr. Spiegel was presented with an investment opportunity in an insurance business within Lloyds of London . Although two of the three business lines up for sale didn't appeal to Pine Brook, Mr. Spiegel saw promise in the third, which bought insurance companies or syndicates that were no longer underwriting new policies. Ultimately, however, he needed to convince Lloyds to give the company a license to create an independent runoff business within Lloyds, something that the London financial giant had never done before. After months of back and forth, Syndicate Holding Corp. was launched in May 2007 and, over the past four years, the business has averaged a more than 30% annual return on equity.

"William saw an opportunity that was not readymade," said Mr. Newman. "It wasn't even Play-Doh; it was the stuff before Play-Doh."

Mr. Spiegel's persuasive powers also proved useful in the establishment of mortgage insurer Essent Guaranty Ltd. In late 2007, Mr. Spiegel saw an opportunity to create a new mortgage insurance business, as many veteran insurers reeled from losses stemming from the collapse of the subprime market. He recruited Mark Casale , a former president of mortgage insurer Radian Guaranty , to help with diligence. Although Mr. Casale admits he was skeptical at first, Mr. Spiegel ultimately convinced him of the potential payoff in creating a new market entrant with a clean, well-capitalized balance sheet. In 2008, they launched Essent with $500 million in capital and installed Mr. Casale as chief executive.

Mr. Spiegel's affable nature and sense of vision not only helped the company attract other investors besides Pine Brook, but also helped smooth things over when disagreements arose, according to Mr. Casale. For example, in 2009, not long after Essent launched, the company was presented with a deal that would have brought in revenue, but Essent's management team didn't believe it would serve the company's long-term interest. Although some of Essent's other investors wanted the company to do the deal, Mr. Spiegel persuaded them to back off.

Ultimately, the original vision paid off, according to Mr. Casale, who said that since it wrote its first policy in 2010, Essent has grown to $10 billion of insurance in force, a common metric for measuring mortgage insurers. He also estimates that it makes up about 10% of the mortgage insurance market.

"[William] helped preach patience with other investors and even with the management team," said Mr. Casale. "When you're a manager building an organization with as large a scale as ours, the last thing you need is pressure from investors."

Career Path

William Spiegel helped launch Pine Brook in 2006 after President and Chief Executive Howard Newman tried unsuccessfully to recruit him to head the financial services group at Warburg Pincus a few years earlier. Before that, Mr. Spiegel was with Cypress Group, where he managed the firm's investments in financial services and health care from 1994 until 2006.

Education

Mr. Spiegel earned his undergraduate degree in economics from the London School of Economics, a master's in economics from the University of Western Ontario and a master's in business adminstration from the University of Chicago.

Personal

Although he played hockey in his youth, Mr. Spiegel currently prefers tennis, downhill skiing and jogging.

[simon gordon] 04/12/2021 12:24

Exponential View podcast - 17/11/21:

The AI Revolution is Just Beginning (with Nathan Benaich and Ian Hogarth)

Investors Nathan Benaich and Ian Hogarth co-author the influential, annual “State of AI” report. They join Azeem Azhar to discuss breakout developments in disparate fields, from defense to medical biology. And they offer their take on the flood of new investments into AI and how we can best keep the technology safe for humanity.

[simon gordon] 01/12/2021 10:07

Tech fund manager Ben Rogoff's outlook chimes with William Spiegel's strategic initiatives on data and automation:

‘If we’re right, the role of technology will be elevated to a whole new level,’ he said. ‘We’re at the front end of businesses beginning to be transformed. AI represents the same level of opportunity and threat that the internet did 20 years ago. Those that embrace it, make data-driven decisions and automate as many processes as possible will thrive and those that don’t will probably go out of business.’

-

From the 2020 Prelims:

Automation

There are many manual and repetitive tasks in the insurance businesses that should be automated by "digital workers". Automating these tasks allows "human workers" to do what humans do best - think! This emerging field of automation improves the efficiency, productivity and therefore happiness of an employee base. To put this in context, ~60% of all jobs have 30% of tasks that can be automated. Applying automation to our business will us allow us to scale in a sustainable manner as we automate workflow processes such as MGA audits, contract wordings and certain aspects of diligence. We are beginning to engage with the leading players in this area.


Data

There is a growing awareness that - "Every company is a data company"; whether it is a restaurant, an airline or an insurance company, the uniqueness of a company is its "own data" and how it uses that data to better understand its markets and improve its decision making. R&Q is no different and we are starting the cultural journey of defining ourselves as a "data company competing in program management and legacy insurance". Our goal is to proactively use our own data to enhance, for example, our claims decision making and legacy acquisition pricing, by leveraging machine learning and artificial intelligence as part of our core competencies.

====

Excellent column on Ben's thinking:

Citywire - 30/11/21

Polar Capital's Rogoff: Tech saved the world – and will dominate returns again

[simon gordon] 30/11/2021 17:55

"It's about execution. Bright ideas are slightly more common than people think. Execution of bright ideas is extremely rare."

Terry Smith

=

-Progam: executing ahead of expectations.

-Legacy (Gibson Re): still a baby.

[simon gordon] 28/11/2021 14:46

Another senior hire in Legacy - joined in October:

Paul Donovan

Global Head of Legacy Operations

-Prior to R&Q he was Chief Operations and Risk Officer at the Vibe Syndicate.



------

Edit: it looks like he came with the Vibe Syndicate purchase, December 2020.

[simon gordon] 23/11/2021 20:17

Interesting piece by the same author as the previous article:

Artemis - 15/10/20

Third-party capital can play dual-role at R&Q, in program business & legacy

....On the program management side, alternative capital is seen as one of the reinsurance capital sources that can support its growing program business, under the Accredited brand.

The appetite to access high-quality underwritten business through managed programs is clear in the ILS market and at this time it can provide an additional and often complementary, sometimes diversifying source of risk premiums to add to the collateralised reinsurance portfolio built through renewal business.

This is where the dual-role comes in, as for R&Q the same sources of alternative capital can help to drive efficiencies to both sides of its strategy, benefiting the legacy transaction flow, while also providing efficient reinsurance capital to support the MGA’s and brokers its program management side works with.

Which also means, if R&Q can harness third-party capital successfully, it could offer multiple strands and strategies to investors, from the legacy side and the program side and perhaps even a combined strategy where shorter-tailed business on the program side can help to offset some of the tail effects of the legacy portfolios assumed.

Which is why its ambitions in this area make a lot of sense. Although the company is likely to face the same challenges everyone has right now when it comes to capital raising.

But laying the foundations for a more full-featured third-party capital strategy will likely reap dividends for R&Q as and when investor appetite for direct access to insurance-linked returns resurges post-pandemic, as it’s expected to do.

[simon gordon] 23/11/2021 19:55

Some interesting comments on Gibson RE and Program in this interview with William Spiegel in September:

Artemis - 6/9/21

Gibson Re sidecar “not changing the recipe book” at R&Q: Spiegel

....R&Q has elected not to own its collateralised reinsurance sidecar vehicle, which is a little unusual as most sponsors tend to own the special purpose structure and the investors purely allocate their capital to it.

But in the case of Gibson Re Ltd., it has been set up by the third-party investors, along with a second Bermuda based company Gibson Ltd. as a kind of manager.

Spiegel sees this as strategically the right thing to have done for R&Q.

“It’s more efficient for us to put the 20% on our own balance-sheet, not own the sidecar. The sidecar is a separate entity owned by the investors but the relationship is a quota share basis, so any deal we do they will do as well,” he explained.

“That’s part of all of our deals. There should be no cherry-picking and all the deals will be done 80/20 and there will be no change in our underwriting and investment standards.”

The goal is clearly to turn Gibson Re into a sidecar that gets renewed to recapitalise R&Q’s legacy dealmaking firepower as and when needed, to ensure it can always have access to the funds to continue building out its legacy premium and investment portfolios.

Which is why Spiegel sees the sidecar as something permanent, a shift in the business model and one that should see R&Q increasingly reliant on third-party investor capital to support its legacy business.

He told us, “What I do see is that Gibson Re 2, is raised in three years, or however long it takes to put the money to work, and then Gibson Re 3, and it becomes a permanent part of our strategy of continuing to make us a capital-lighter business model.”

“But we need to do a good job,” he said. “This is not a strategy where, the market’s hard and let’s raise a sidecar. Both of our markets have secular growth and in a capital intensive business with secular growth you need access to additional forms of financing and that’s what this is.

“We hope this will be a permanent part of what we do going forward.”

We asked Spiegel whether R&Q has ambitions to tap into third-party investor appetite on the program management and fronting side of its business as well, given that is also fee income based and could also benefit from taking greater ownership of the reinsurance capital supporting those programs.

“I think there is an opportunity,” Spiegel said. “We are the paper for about $900m annualised of gross written paper today and we’ve made it clear to the market we should be at $1.75 billion in 2023.

“We have access to and control a lot of premiums, so is there a way to have a sidecar set up so third-party investors have direct access to the MGA’s we work with? There could be.

“That’s certainly something that’s on our mind but it didn’t have the same level of need, because we’re taking less than 10% and there’s a lot of quota share support, whereas legacy was all on our balance-sheet and it was very capital intensive.”

Getting over the drag of the public-market balance-sheet seems to have been key for R&Q in this transition and Spiegel feels the company’s shareholders should start to think differently about the company now.

“I think they should. They should think about us as an asset manager and a fee-based business and not a balance-sheet business,” he commented. Adding that, “We’re hoping we can move the business to more of an asset management business and more of an asset management multiple.”

Valuation of the business is clearly on Spiegel’s mind and his forecasts for the share price have been bullish historically. It’s going to be interesting to see how the market takes to this new model, given shareholders funds are now perhaps more important for the corporate side, than the underwriting side.

It may take shareholders a little time to come to terms with this, but the potential to lean on efficient capital market funding to support a growing legacy portfolio could come with rewards, as long as the business acquired and written is of high-quality and earns out profitably with no negative surprises.

But there is no temptation here to try and compete for the very largest legacy and run-off market deals, Spiegel said.

“I think if we wanted to we could. But we really like the niche that we’re in, which is the small to mid-sized deals where we have a big competitive advantage.

“If you look at who’s done deals over the last five years, we’ve done more than any other legacy firm and that’s because we do the small to mid-sized deals and we’ve got a good recipe book.

“One of the reasons investors supported us in Gibson is that we’re not changing the recipe book. So, this isn’t about let’s change the deals that we’re doing at all, it’s actually let’s do more of what we’re doing,” he remarked.

On the investor side, unsurprisingly Spiegel wouldn’t be drawn on naming the backers of Gibson Re sidecar, but he’s pleased with the names he’s secured as capital partners it seems.

Explaining that, “They’re very sophisticated insurance investors and that gave us great comfort because it was people that really understood the business. As an asset manager you’re always better off if your investors really understand your business.

“This is a very sophisticated group and we’re very happy to partner with them and hope they will grow with us.”

On the size of the sidecar, at $300 million, which was smaller than the initial sidecar proposals at R&Q had been contemplating, as we covered back in July, Spiegel said the capital raised was designed to match the business opportunities the company realistically believes it can win.

“We raised what we felt we could deploy. This wasn’t an AUM game at all for us. We’ve seen the demand for our capital and we sized this to take advantage of the opportunities over the next three years,” he said.

On the time it could take to deploy the capital, Spiegel added, “I’m hoping we can put the money to work faster, but that isn’t the goal. We might put it out equally over three years, we might put it all out at the end of the third year depending on where the opportunities are.

“Our acquisition approach is unchanged here, we raised what we thought we could invest.”

With the Gibson Re sidecar set to take an 80% share of all legacy deals that meet its requirements, while R&Q’s balance-sheet will get the remaining 20%, both sides will be motivated to ensure the profitability of the business acquired and underwritten.

Spiegel highlighted that the underwriting practices don’t change and neither does the investment side of this business, as legacy and run-off generates significant investable float.

That’s important he feels, commenting, “Everything is aligned. It’s all about alignment of interests, it has to be for the investors.”

Shareholders, analysts and new sidecar investors alike will be watching R&Q’s results closely going forwards, to see how this new strategy beds in and whether the earnings stream is indeed as smooth and predictable as Spiegel hopes for.

[simon gordon] 23/11/2021 06:51

Just started reading Paul Marshall's book - Ten and a Half Lessons from Experience - and these quotes resonated with me in regards to RQIH:

"The greatest opportunities always occur around change. The valuation of a company will not change unless something changes intrinsically about the company (financially, operationally or strategically) or something changes about its economic/financial context (interest rates, growth, volatility, inflation) to create or destroy value.

"Change is embodied in catalysts. These are the events, like takeovers, strategy announcements or new product launches, which announce to the market that something has happened and views need to be revised. That is why so many investors use a model based around 'valuation with a catalyst'."

"Investors respond to stories. Catalysts make the stories concrete. That is the other reason why 'value with a catalyst' is so effective as an investment approach. Provided the stock has a claim to undervaluation and there is a path to how the value can be crystallised, the thesis can be wrapped in a 'story' and passed on (brokered)."

It's a super little book, only six quid:

[simon gordon] 19/11/2021 16:43

William Spiegel - 6/9/21:

"By 2023 expect run-rate Group Fee Income of greater than $140 million and Group Pre-Tax Operating Profit of over $90 million, assuming Gibson Re capital is fully utilised by 2023"

-----

Capital Access note - 9/9/21:

A quick calculation suggests that by year 3, if all capital is deployed but not outperforming the undisclosed performance fee baseline, R&Q’s recurring 4.25% of $1.6bn would represent c.$68m of recurring revenue. Management estimates $50m of recurring fee income by the end of year 2 (FY23), which seems sensible in light of this and the large pipeline R&Q enjoys. It also estimates a further $25m of non-recurring income at that time. This would materially expand the profitability of the group, given that we believe most of it would flow down to pre-tax operating profit.

After 7 years, R&Q is obliged to offer Gibson Re a commutation on the portfolio, but Gibson Re is not obliged to accept. However, R&Q can set the pricing for its offer, which it would ensure generates it a 15% return. Should Gibson Re decline the offer, the vehicle would roll over for another 12 months, at which point the process would be repeated. We wouldn’t be surprised to see the portfolio roll repeatedly as the investors enjoy the benefits of R&Q’s execution and operational abilities.

In due course we would also expect further vehicles to be formed, with significant appetite from investors (all of whom were selected by R&Q to participate due to the vehicle being over-subscribed) and a large and enduring pipeline of potential transactions in the Legacy Insurance market.

-----

I think it's possible that RQIH could smash 2023 by under promising and over delivering.

The operational leverage will be superb when a 2nd sidecar is added. An interesting question is how long it takes to fill a side car.

[red ninja] 19/11/2021 16:22

AM Best Affirms Credit Ratings of Randall & Quilter Investment Holdings Ltd. and Its Subsidiaries

[simon gordon] 18/11/2021 11:48

Little mention in yesterday's Telegraph:

Brendan Gulston, manager of the Gresham House UK Multi-Cap fund, suggested Aim stock Randall & Quilter, an insurer, although investors should note that it is unclear whether it qualifies for IHT relief.

“The company seems very technical, which often acts as a barrier that stops people from investing in it,” Mr Gulston said. “But we think that it presents a very attractive opportunity for capital growth as well as income.” The shares have returned 54pc over the past five years and carry a dividend yield of 2.3pc.

[simon gordon] 16/11/2021 14:29

Ninja,

I see the non-exec at Howay is from the insurance industry:

Richard Hextall

Richard joined Howay Investments as a Non-Executive Advisor in April 2021. He spent most of his 30-year career as Group CFO of Amlin where he helped transform the business from a Lloyd’s of London syndicate into an international insurance group that entered the FTSE 250. He served as a Non-Executive Director of City of London Investment Trust between 2007 and 2016. He is currently Group CFO of IQUW Insurance.

Richard is a Chartered Accountant and has a first class Economics degree from the University of Salford.

[red ninja] 16/11/2021 14:14

Looks like RQIH became a top 10 Howay Equity fund in September probably following the Gibson Re announcement.

Quite a few funds have bought into the RQIH story, but it's not really attracting the PIs so much given how quiet this board is.

It's top 10 for me, but I could be deluded.

[simon gordon] 16/11/2021 13:46

This fund manager has RQIH in his top ten - here's his commentary for November 2021:

Howay Investments

Tomorrow’s fish and chip paper

Volatility has returned to the stock market in recent weeks due to concerns around strained global supply chains and rising inflation. When volatility is on the rise there is a tendency for many commentators to use share price movements as the determinant of truth for any given company. If a company’s share price rises significantly then it must be because they are doing everything right and if a company’s share price falls significantly then that company must be doing everything wrong.

This is clearly not right. Humans regularly over-react to good news and bad news and this naturally plays out in a pronounced way in the melting pot of human emotions that is the stock market.

A few weeks ago, Jeff Bezos tweeted a picture of the front cover of Barron’s, the prestigious US financial news journal from May 1999. The headline of the article was ‘Amazon.Bomb’ and the narrative on the front cover read as follows ‘The idea that Amazon CEO Jeff Bezos has pioneered a new business paradigm is silly. He’s just another middleman and the stock market is beginning to catch on to that fact. The real winners on the internet will be firms that sell their own products directly to consumers. Just look at what’s happening at Sony, Dell and Bertelsmann.’

After the article was published, Amazon’s shares declined by around 70% over the next 2 years and it took another 6 years for the share price to recover to the level before the article was published. Over that period, you can imagine how great the journalist must have felt about his big call on Amazon. He must have been the talk of the office at Barron’s with everyone giving him a high five for getting Amazon right. After all, the share price had plummeted so he must be right, right?

Wrong! Today, Amazon is one of the largest companies of all time, it has revolutionized two different industries of the global economy (consumer retail and the Cloud) and Amazon’s share price is around 53x higher than at the date the Barron’s article was first published. $10,000 of shares held then would be worth $530,000 today! It’s not unusual for historic headlines to look ridiculous when we look back on them with the benefit of the passage of time. As the old saying goes, today’s headlines are tomorrow’s fish and chip paper.

The Amazon article reminded us of one of the UK’s few ecommerce success stories over the last decade, Ocado, the grocery delivery business. Ocado floated on the London stock exchange in 2010 at a price of 180p per share and by the end of December 2011 the shares had fallen by around two thirds. Most financial analysts at the time were highly disparaging about Ocado. Below are quotes from some of the leading analysts at the time (we have withheld their names to spare their blushes!):

“Even at the revised valuation, the company is still overvalued and expensive. We would not be surprised to see hedge funds shorting the stock.”

“It is astonishing how high a price is being paid for Ocado.”

“Like many, we are buyers of its service, but not the shares at these levels. We think the current price simply asks too much of the company in the next 10 years, especially bearing in mind the starting point.”

10 years later Ocado shares had increased more than 10x from the IPO price and 30x from the December 2011 low. Most UK fund managers missed Ocado in the same way that most US fund managers missed Amazon. Despite having an increasing number of online deliveries arriving at their households over the years, many professional investors failed to spot what was happening with ecommerce, which with the benefit of hindsight now seems obvious to all of us. Why did this happen?

We believe the main reason is short-termism. In our view, many professional investors spend too much time focusing on the short-term financial performance of businesses and insufficient time thinking about their long-term potential. All of the Ocado quotes above stem from the fact that the analysts were too focused on what Ocado was then (a small and unprofitable business) rather than understanding what it could be in the future.

Wayne Gretzky, the famous ice hockey legend once described the reason for his success as “I skate to where the puck is going to be, not where it’s been.” Investing is about identifying companies that are attractively valued relative to their future profits. All investors would agree with this statement, but in our view, most focus on business value relative to existing profits. Therein lies a great opportunity for the long-term patient investor.

[simon gordon] 15/11/2021 09:28

Yes, R&Q have the set the business up brilliantly. They have a deep pool of talent and licenses. The new North American team have added dynamism and access to talent pools in the USA. I am very impressed by the top hires.

The story and share set up reminds me a bit of Microgen (Aptitude) where the founder sold out and passed the baton, there had been a takeover approach which had been turned down. Once the market saw the new growth actualising the share rerated from 120p to 500p in a year. Now, I'm not saying this will multi bag rapidly but it has the ingredients for a rapid rerating due to the scope to increase GWP and add more sidecars. The earnings are recurring and warrant a decent rating. If they do 20p (Numis 19.1p) in 2023 and rerate to 15x it hits 300p, maybe in 2022 it moves to the 250p zone whilst waiting to move to 300p in 2023. If they were to be sold wouldn't 20x 2023 be a reasonable price - 400p?

Maybe the takeover chatter will wake the market up but in Microgen's case it didn't.

In 2024 they should be doing c.25p and I think it's possible, if they get both divisions firing, that in 2027 they could be reaching toward EPS of 50p at 15x = 750p.

[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!