Randall & Quilter Investment Holdings Ltd (R&Q) has reported a loss before tax of $162.0 million for 2021, including a pre-tax operating loss of $21.0 million.
The non-life global specialty insurance company recorded an operating profit of $20.6 million in its program management business, but this was offset by an operating loss of $5.7 million for legacy insurance and a loss of $35.9 million for corporate/other.
R&Q says its underlying businesses “performed well in 2021,” but that its group operating results were negatively impacted by reserve development and a non-cash impairment of a structured reinsurance contract that was previously recognised as an asset.
For comparison, R&Q recorded profit before tax of $38.7 million for 2020, including pre-tax operating profit of $20.6 million.
For 2021, gross operating income amounted to $138.3 million, consisting of underwriting income of $57.4 million, fee income of $56.1 million and investment income of $24.8 million. In the previous year, gross operating income was $145.4 million, consisting of underwriting income of $100.5 million, fee income of $24.1 million and investment income of $20.8 million.
These results come at an already-difficult time for R&Q after the collapse of its pending acquisition by Brickell PC Insurance Holdings LLC, a company backed by 777 Partners.
The deal, which was announced at the start of April, had valued R&Q’s existing issued share capital at approximately £482 million, but sharholders rejected the transaction after Brickell alleged that R&Q was in breach of certain obligations.
R&Q’s share prices have dropped in the wake of the deal’s termination, and AM Best has turned negative on its business units, as the firm targets a $100 million capital raise to recoup on its losses.
But there are questions marks over just how the deal fell apart after it emerged that a significant proportion of shares in R&Q owned by would-be acquirer 777 Partners were held as collateral to a loan by another party.
Commenting on R&Q’s 2021 results, Executive Chairman William Spiegel commented: “Our Group result reflects a year of evolution towards our future state, and I am pleased that we have reported underlying progress in both of our businesses, Program Management and Legacy Insurance. In addition to a number of strategic milestones, this is showcased by our two primary KPIs: growing GWP in Program Management and RUM in Legacy Insurance, each leading to growing Fee Income and highlighting the high quality revenue potential of R&Q.”
He continued: “The legacy market, and our addressable market within this, remains highly attractive as risk carriers continue to proactively manage their capital positions. The ongoing attractive rating environment for ‘live’ business has meant we have seen ongoing strong demand for legacy solutions and expect this to continue through 2022 and beyond. More fundamentally, legacy has now firmly established itself as a permanent part of the capital life-cycle within non-life insurance. With the barriers to entry remaining high, R&Q is strongly positioned.”
“The program market is also benefiting from equally attractive market conditions as talented underwriters continue to establish their own MGAs and capital providers seek underwriting outperformance. As in the legacy market, R&Q is enviably positioned: we are a genuinely independent program manager with a highly rated balance sheet and licences.”
And on the planned $100 million capital raise, Spiegal said: “We expect to complete our Fundraise in the coming weeks, and I have been encouraged by the strong indications of interest we have had from shareholders. This funding will give us the capital we need to de-lever our balance sheet and maintain the strong financial profile that is an important part of our growth.”