Result hit by transaction delays and timings of payments, says chief executive Ken Randall
Randall & Quilter (R&Q) made a loss before tax of £898,000 in the first half of 2014, compared with a £4.1m profit in the same period last year.
The run-off buyer’s adjusted loss before tax, which excludes exceptional acquisition costs and minority interests, was £600,000 for the first half of 2014, compared with an adjusted profit before tax of £3m in the first half of 2013.
The drop in profitability came despite a 34% increase in total revenue to £35.1m (H1 2013: £26.2m).
R&Q chief executive Ken Randall described the result as ‘weak’, but blamed transaction delays and timings of payments.
Randall said: “We anticipated that 2014 was going to be challenging from a financial perspective, most especially in the first half, which is always affected by the second half income bias in our service businesses, the timing of the actuarial reviews of our run-off portfolios and April bonus payments.
“Delays in the completion of certain anticipated legacy transactions because of extended regulatory and counterparty processes, together with time and expenses incurred on the [US insurer] Accredited acquisition process, also affected the result.”
He added: “While financial performance was weak in the first half, as flagged in the AGM trading update, 2014 has seen many positive developments. We have progressed a number of legacy insurance transactions in the first six months of the year, using our newly enhanced and flexible legacy platforms, and the newly refinanced bank facility provides valuable additional long term investment capacity for our healthy ongoing pipeline.”
Randall noted that the proposed acquisition of US insurer Accredited would add the first A-rated insurer to the R&Q portfolio.
Other positive developments in the half included a near doubling of the capacity of Lloyd’s syndicate 1991, which R&Q set up last year, to £150m, and refinancing of the company’s credit facilities with the Royal Bank of Scotland.
R&Q has also been awarded a contract to provide outsourcing support to a prospective new Lloyd’s syndicate.