New Programs underpin outlook

The group’s recent trading update confirms that growth in the Program Management division, Accredited, is firmly on track. In the twelve months to 31 Dec 2020, it recorded a 46% increase in Gross Written Premium (GWP) and 76% higher Economic Commission Revenue (ECR) at $22.7m. That reflected 18 new programs contracted (48 active programs at the year-end) and 52% higher Contracted Premium at $1,281m.

The outlook is underpinned by the Division’s entry into the US Excess & Surplus (E&S) Program Management Market in Q4 2020. That transformed Accredited into a comprehensive PM solutions provider in all its markets. The partnerships agreed during the final quarter included three by its US operation, two in Europe, and both operations report strong new business pipelines.

In January R&Q confirmed that it had received the necessary regulatory approval for investment vehicle Brickell to exchange its preferred stock for ordinary shares, effective 27 January 2021. Post that, Brickell holds just under 70m shares (25.53% of the ordinary equity).

Despite strong progress R&Q’s shares still stand at just 1.2x our estimate of tangible NAV this year, yet the speciality insurance sector has averaged a 2.3x rating over the last five years. Even a move by R&Q shares to just 1.5x NAV would put them at 218p. A move to 1.8x, still a large discount to peers and arguably justified by prospects, would imply 261p.