Randall & Quilter Investment Holdings

HOLD

02/05/2011 Robert Tyerman

Non-life insurance services group Randall & Quilter (RQIH) is heading for more growth after hoisting annual pre-tax profits from £259,000 to £7.5m. The London-based company, founded by Lloyd's veterans Ken Randall and Alan Quilter as an insurance policy run-off specialist, increased revenues 23% to £32.8m last year, halved net claims payments to £13.8m and benefited from a six fold increase to £9.5m in the release of net insurance provisions.

Randall, executive chairman and significant shareholder in AIM-quoted RQIH, points to a 130% rise to £5.8m in operating profits at the company's core insurance services, helped, as analysts point out, by profit commissions on managing Lloyd's reinsurance-to-close syndicate 3330. The investment division boosted operating profits from £1.3m to £7.4m, despite a second-half fall in investment income, which was expected.

RQIH lost £1m last year in its new underwriting management division, as a result of predictable development costs. Randall says this investment is now beginning to yield some benefit, following the launch of the Skuld syndicate 1897 in Lloyd's early this year and the establishment of several managing general agents with delegated underwriting facilities from Lloyd's and other international underwriters.

The company is now looking to acquire more legacy (run-off) insurance assets, seeing opportunities to do so on attractive terms enhanced by the pressure on insurance industry capital imposed by catastrophe claims from around the world and impending tighter solvency requirements. Randall says 'insurance debt acquisition' is an area also gathering momentum and indicates RQIH will be ready to take minority stakes alongside third party capital providers in ventures it backs.

House broker Numis sees pre-tax profits reaching £78.8m this year, with £8.2m on the cards for 2012. A progressive payout policy and a yield of nearly 7% add to the attractions.

Highlighted by Growth Company Investor at 91p in September, RQIH's tightly-held shares now trade at 109.5p. Hold on.