Bermuda based insurer R&Q Insurance Holdings Ltd has reported an overall loss of $136.7 million from operations before income taxes across its business segments during the first six months of 2022, following large investment losses caused by volatile market conditions.
The negative performance follows on from a loss of $45.4 million for the same period last year, as R&Q’s 2022 results included net investment losses of $88 million.
Accounting for an income tax credit, the company’s loss from operations for H1 was $122.4 million, versus $36.8 million for the same period last year.
R&Q has come under pressure from investors in recent weeks to replace its Executive Chairman, William Spiegel, after Brickell, which is backed by private investment firm 777 Partners, said it had “lost confidence in the ability of R&Q to deliver on its potential under its current leadership” since the collapse of its £482 million deal to acquire the company.
Since then, a number of major shareholders have come out both for and against Spiegel, and these latest results will surely provide more fuel for the debate as firms continue to deliberate on whether they feel a change in R&Q’s management is required.
Other notable figures from the results include a pre-tax operating loss of $24.3 million, as R&Q’s results were impacted by a $26.7 million loss in the company legacy segment due to the transformation to an annual recurring fee business, which R&Q assures will become profitable as Gibson Re by 2024.
R&Q also maintained that its operational improvement programme is now well underway with around $10 million of the total $20‒25 million investment deployed since 2021, with the remainder to be incurred in H2 2022 and 2023.
“I am pleased to report another six months of progress against our 5-year strategy,” commented Spiegel. “These results showcase excellent underlying momentum in executing our 5-pillar strategy as we continue our transformation into a fee-based, capital-lighter business. This transformation is evidenced by the significant growth in recurring Fee Income, which has more than doubled from last year and now represents over 60% of our Gross Operating Income, a proxy for revenue.”
“We also re-iterate our confidence in achieving in excess of $90 million of Pre-Tax Operating Profit in 2024. As a result of our strategy, R&Q will deliver more predictable earnings, with increased returns on equity and growing sustainable shareholder dividends over time.”
Spiegel also stated that the outlook for both Program Management and Legacy Insurance remains “highly favourable,” with both thought to be well insulated against many of the broader macroeconomic challenges impacting the wider insurance industry such as rising interest rates, increasing inflation, hardening re/insurance pricing and the Ukraine/Russia conflict.
