R&Q Insurance Holdings (R&Q), a leading non-life global specialty insurance company focusing on program management and legacy insurance, has released its financial results for the half year ended June 30, 2022 (H1 FY22).
The group’s financial report for the first half of the year highlighted its progress against its strategic objectives. Specifically, R&Q reported gross written premium (GWP) of $807.3 million in H1 FY22, a dramatic increase of 82% from $444.8 million in the first half of 2021 (H1 FY21). During the same period, the group saw a pre-tax operating profit of $23.3 million (up 136% from $9.9 million in H1 FY21) and a pre-tax operating profit margin of $54.0 (up 14.1% from 39.9% in H1 FY21).
Additionally, the group’s total fee income for H1 FY22 was $53.1 million, a 112% increase from $25.1 million in H1 FY21. However, it saw a $24.3 million pre-tax operating loss due to its legacy insurance revenue model transition.
Focusing on legacy insurance, the group revealed that it completed two transactions with gross reserves acquired of $5.3 million during the same period, with the transactions seasonally active in Q4. It also reported $386.6 million reserves under management, an $8.8 million fee income, and a $26.7 million pre-tax operating loss as the business transitions to an annual recurring, fee-based revenue model.
R&Q executive chairman William Spiegel said the latest financial results showcase the R&Q team’s excellent underlying momentum in executing the group’s five-pillar strategy as it continues to transform into a fee-based, capital-lighter business.
“This transformation is evidenced by the significant growth in recurring fee income, which has more than doubled from last year and now represents over 60% of our gross operating income, a proxy for revenue,” Spiegel said. “We also reiterate our confidence in achieving in excess of $90 million of pre-tax operating profit in 2024.”
With the success of R&Q’s strategy, Spiegel said the company will deliver more predictable earnings, with increased returns on equity and growing sustainable shareholder dividends over time. It will also continue implementing extensive improvements in how the team operates the company to make it more efficient and technology-enabled while enhancing its governance, culture, and risk management.
“As part of this effort, we are investing a total of $20 million to $25 million, with c. $10 million already incurred to date, in process automation and technology. We expect this program to generate c. $10 million of annual efficiencies by 2024, implying a payback on the upfront investment in approximately three years,” Spiegel said.
“In conclusion, the first half of the year has firmly demonstrated our ability to deliver on our five-year, five-pillar strategy of implementing a capital-lighter business model underpinned by recurring fee income. We know there is more work to do, but I am encouraged by how much we have already accomplished and the pace at which we are evolving into a less balance sheet-intensive business with more predictable earnings. This is only made possible because of our talented and committed employees, and I would like to thank them for their ongoing efforts in helping us to achieve our goals.”
