Strong Program growth, healthy Legacy pipeline

In our detailed note on July 7th that followed the 2019 results we argued that R&Q’s shares were materially undervalued. Trading at a 40% discount to the average rating of industry peers versus NAV, despite superior performance.

Three positive announcements this week confirm that the group continues to perform as expected despite the impact of Covid-19, and in line with our forecasts.

First, R&Q reported that its Program Management division added 10 new programs over the 12 months to end June 2020, and closed the period with 36 active programs.. As at end H1 contracted premium was $924.5m (H119: $431.6m) and Gross Written Premium (GWP) $247.2m (H119: $172.9m); respective increases of 114% and 43%.

Subsequent announcements confirmed agreements to acquire, subject to regulatory approval, Inceptum Insurance Co. Ltd. and The World Marine and General Insurance Co. R&Q also confirmed a ‘healthy pipeline of opportunities and further transactions nearing completion’ which it expects to announce over the next few weeks.

Deals, trading updates and confidence as to further activity have all been recently reported by R&Q, supporting both our forecasts and view that the company’s growth opportunity is being substantially underestimated by the stock-market.