Growth momentum is gathering pace

The recent update on its Program Management (PM) activities confirmed that RQIH is enjoying the fruits of prior investment and, importantly, seeing further acceleration in the division. We expect that PM will become an increasingly valuable source of visible, recurring, fee-based income and progressively balance the Group’s highly successful, but more opaque - from a forecast perspective - Legacy operation.

An impressive 6 months to end June 2021 for PM included the following y-o-y growth: Gross Written Premium +80% to US$445m, Fee Income +135% to US$25.2m, Contracted Premium +74% to US$1.6bn. The division also added another 13 programs to finish the period at 60 programs at end June 2021 (36 at end June 2020), and a further another seven in July to bring the total to 67.

We retain forecasts and our 240p/share fair value assumption. That represents a sum of the parts for two distinct businesses and revenue profiles: PM (a fee business) at a multiple of pre-tax operating earnings and Legacy (M&A related) a multiple of Tangible NAV, in line with specialty insurers.