Asbestos claims drag down R&Q results
Randall & Quilter (R&Q), the insurance services and investment company, posted a jump in its revenues last year but made heavy losses driven by reserve deterioration.
The group’s total income for the year, including premiums written and investment income, increased to £65.4 million in 2014, compared with £54.8 million in 2013. However, it posted a pre-tax loss of £1.6 million, compared with a pre-tax profit of £9.6 million in 2013.
R&Q had previously mentioned that it was experiencing a tough year because of a deterioration in net provisions for asbestos claims in R&Q Re US, the significant legal expenses associated with the recently successfully concluded arbitration of a large life settlement claim in former Syndicate 102, and the failure to secure a number of anticipated service contract wins in the now restructured US service operations were the main contributory factors.
Its insurance investments division posted an operating loss of £4.4 million in 2014, compared with a £10.3 million profit in 2013. R&Q said the division benefitted from the nine legacy transactions completed in the year and from reserve releases from each run-off insurance company save for R&Q Re US, which was affected by deterioration in its US asbestos book.
However, syndicate results were poor in the aggregate, driven by weaker than expected performance in former run-off Syndicate 102 and losses from live syndicate participations. Profitability was also negatively impacted by lower cost recoveries in the US than the prior year.
R&Q’s insurance services division posted an operating profit of £8.3 million in 2014, a decrease compared with £9.8 million in 2013. This was driven by strong performance in its UK unit, but this was offset by disappointing US results.
Its underwriting management division posted an operating profit of £2.8 million in 2014, compared with a loss of £177,000 million in 2013.
During 2014, R&Q secured a new third-party syndicate management contract to provide back office support for Syndicate 2088, the newly established syndicate managed by XL Catlin and backed by China Re.
Ken Randall, chairman and chief executive of the group, said: “We look to the future with confidence after a challenging year financially during 2014. We benefit from an excellent legacy transaction pipeline, a newly streamlined service operation in the US and further opportunity to grow fee income in our underwriting management division. The focus will be firmly on growing tangible book value and resuming the annual increases in cash distributions to shareholders.”
