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Randall & Quilter Investment

Randall & Quilter Update Note - Ramping, & Quickly

The full year results released at the end of April met revised expectations and guidance given that they were impacted by the delayed completion of several Legacy acquisitions. These transactions, including Global Re, have now closed and will feature in 2019 results. In the meantime, Randall & Quilter's strategy to invest in two key businesses with different capital requirements and complementary earning patterns is bearing fruit. Legacy continues to provide opportunities for growth, with a strong pipeline and market tailwinds. This is also a Brexit proof and recession resistant model. The completion of the Global Re deal is transformative, and demonstrates that large scale transactions are achievable. Program Management hit its ambitious Contracted Gross Written Premium target for 2018, and growth continues apace as the competitive advantage of its high-quality insurance paper pays dividends in a market in which many Lloyd's insurers are reducing their new business In other developments, the successful capital raising, the AM Best ratings upgrades, and inclusion in the AIM 100 index are all positive developments. Finally, the question over succession planning, which had been of concern to some investors, has been convincingly answered. In summary demand is strong in both businesses, the platforms are scalable, and the respective markets are changing shape in favour of Randall & Quilter's offering. The balance sheet is in good shape and ready for further acquisitions. Management continue to be adaptive and entrepreneurial, and yet maintain a sensible approach to risk. As a result of all this, we expect the business to continue to perform well. Consensus is thin due to the limited coverage, but forecasts for Randall & Quilter's adjusted 2019 EPS come in at around 18p/share. Consensus distribution and Net Tangible Assets (NTA) per share also increased. The valuation remains undemanding, at a 5.2% yield and a significant P/E discount to the larger Life consolidators.

  • 04 Jul 19
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