LONDON (Alliance News) - Randall & Quilter Investment Holdings Ltd Tuesday said it swung to a first half pretax loss due to net insurance claims incurred and higher operating expenses more than offsetting income growth.
In a statement, the the specialist non-life insurance investor, service provider and underwriting manager said it made a GBP898,000 pretax loss in the six months ended June 30, compared with a GBP4.1 million pretax profit in the corresponding period last year.
Income grew to GBP35.1 million from GBP26.2 million. Randall & Quilter incurred GBP8.2 million of net insurance claims, whereas the corresponding period last year saw GBP3.7 million in net insurance claims released. Operating expenses rose to GBP33.0 million from GBP27.2 million.
Nevertheless, a GBP1.4 million income tax credit meant that Randall & Quilter was able to report an after tax profit of GBP484,000, down from GBP1.1 million a year before.
Excluding costs arising from the proposed acquisition of Accredited Holding Corp, the USD25 million deal unveiled in July, the pretax loss was GBP600,000, while last year's was GBP3.0 million after the deduction of minority interest relating to syndicate 3330 of GBP992,000.
Divisionally, Randall & Quilter said the operating result of its insurance investments division doubled to GBP1.6 million, with higher investment income and a higher contribution from new legacy transactions offsetting a lower profit from the insurance debt purchase activity and weaker syndicate results. Reserve releases from the run-off insurance companies were similar to the prior year.
Its insurance services division reported an operating profit of GBP3.8 million, a fall from the GBP6.3 million reported for the corresponding period last year. Randall & Quilter said that a strong performance in the UK operations was offset by a lower result in the US, which did not benefit from credit write backs it experienced in the prior period.
In addition, Randall & Quilter's underwriting management division reported an operating loss of GBP700,000, compared with a GBP100,000 operating profit in the corresponding period last year, primarily due to a reduction of profit commission following an increase in legal expense reserves.
"We anticipated that 2014 was going to be challenging from a financial perspective, most especially in the first half which is always impacted 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," Chairman and Chief Executive Officer Ken Randall said in a statement.
"Delays in the completion of certain anticipated legacy transactions due to extended regulatory and counterparty processes, together with time and expenses incurred on the accredited acquisition process also affected the result," Randall added.
However, Randall also raised a number of positive developments, despite the weak financial performance in the first half.
"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 said.
Randall & Quilter maintained cash distribution at 3.4 pence per share.
Its shares were Tuesday quoted down 1.0% at 155.00p.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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