The market likes these transactions with specialist self-insurers, the latest being Texas-based. R&Q has identified a specialist field of 'finality solutions' and management are using their skills and expertise to expand within that niche while continuing to:
"... grow commission income from its licensed (and rated) carriers in the US and EU/UK, writing niche and profitable programme business, largely on behalf of highly rated reinsurers ..."
I can see the sp slowly rising to 200p as the market digests this continuing story and the company remains generous in its rewards to shareholders.
Lets hope it continues to pump out these special share "dividends/capital returns" which morph into cash.I think we reached Y shares in October;whether after Z is reached it reverts to back to A remains to be seen......As R&Q is based in Bermuda I almost expected to feature in the Paradise Papers.
Based on the capital return cycle, increased optimism surrounding the company and on the recent, moderately successful open offer I would guess this perversely is not the time to be adding; but hopefully I'm wrong about that.
I took up my entitlement in full at 129p and added a further tranche also at 129p under the terms of the offer although I was scaled back by about 30 pc.
My strategy is to sit tight with an increased stake and possibly pick some more up under 120p (if seen) around New Year or February.
Would prefer to see it gain strength from here however.
1709 at 146p the amount of positive statements in the results today is rare to find amongst all 2,200 listed companies IMHO. In particular what I like is that RQIH operates in long tail and predictable businesses. i.e. they dont want to look silly so if they express publicly such confidence it is because they know that they have profits in the bag awaiting for time to pass before they can be announced. In particular they talk about the simplification of the business is a significant and a priority. It is reasonable obvious which bits of the business they will be disposing and this is expected to be materially above current book value. So they are obviously confident that the group will look differently after this disposal and that the disposal will add value. To be it is a very green flag. The management know something is going to happen but the market and market commentators cannot take it on board yet as it has not been announced. The evidence being the gradual rise in the price from 100p over the last year.
I value the business and recurring dividend at closer to 200p.
And expect that Simon Thompson will soon start to cover in the ic.
these shares are very very tightly held with only 18% in 'public hands'
so 8% traded must be a move by one of the big shareholders.....
of course the interesting bit is to see who has bought these shares in such a tightly controlled company as they must be there for the long term.
i would also deduce that RQIH mgt team would be not promoting the compnay until this trasnaction has been completed, so i think if anything there could be further good news around the corner.
They have been returning capital to investors via a distribution policy that was initiated in 2015. The advantage of this over dividends is that it is not taxable. You might conclude from this policy that the company is struggling but in fact earnings have held up quite well. The payouts have been handsome, equating to 6.5% tax free p.a. based on the current sp or well over 8% p.a. equivalent in dividends, depending on your tax band.
I'd say that regardless of the overall market direction this will either go sideways or rise as we approach the bigger August return of capital followed by the smaller November one. A comfortable buy/hold therefore in my opinion.
I'm watching these again, after a three year absence. In my opinion they are showing a welcome return to form.
A couple of negatives; there is always risk with buying up old books, you can easily get the risk wrong. Also the Net Tangible Assets, which is the true measure of insurance company strength, has only risen from 83.7p to 85.1p. Currency effects alone should do that.
What the above is showing is that the company has been distributing it's profits as dividends, rather than retaining any. And yet the share price has risen quite a bit.
I could be a buyer of these again, but only at a price which reflects the NTA. A multiple of 1.5 is quite rich......
"Things" are actually much in-line with what they expected.
It's the outlook I think which has moved the price. They are getting rid of underperforming stuff and, to the point, suggesting 8.4p pa distributions are feasible for the forseeable.
(I do agree, insurance companies' accounts are the devil's work.)
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