Randall & Quilter profit falls

Run-off specialist Randall and Quilter announced profits fell in the first half of 2008 with pre-tax falling more than 70% to £1.2m and the firm making a loss after tax.

Financial highlights (2008 in brackets)

• Gross premiums written £379,000 (£424,000)
• Reinsurers' share of gross premiums -£112,000 (£188,000)
• Earned premium net of reinsurance £267,000 (£612,000)
• Net investment income £3.6m (£5.4m)
• Other income £6.7m (£4.5m)
• Total income £10.6m (£10.6m)
• Gross claims paid £24.2m (£25.1m)
• Reinsurers' share of gross claims paid £13.8m (£15.4m)
• Claims paid, net of reinsurance £10.4m (£9.7m)
• Result of operating activities £1.2m (£4.5m)
• Profit on ordinary activities before income taxes £1.2m (£4.4m)
• Loss/Profit for the period -£952,000 (£2.6m)

This year the firm expanded into captive run-off with the acquisition of Woolworths Insurance (Guernsey). It also developed its broker run-off with its proposed acquisition of RK Carvill subsidiaries in London and USA

Positive outlook

Ken Randall, chairman and chief executive officer, said: “We continue to see development in each segment of our business and have achieved a modest pre-tax profit in the half year despite unrealised investment losses and litigation expenses.

“Our acquisition pipeline remains strong and the Group's final results are expected to benefit from an improved investment performance in the second half of the year.”

Better reinsurance knowledge

The company said it improved its understanding of reinsurance, which promised to make a big difference. “As a result, we have greater confidence in our reserving methodology and this has enabled a release of a centrally held claims provision of £5.6m (net of an associated bad debt adjustment) at 30 June 2009,” it said.

It is still embroiled in legal action with Equitas over claims relating to Exxon Valdez and the first Gulf war of 1991.

“The vast majority of these claims are the subject of arbitration but a limited number are being litigated in the English High Court. The first stage of the trial took place in June but, due to the Summer Court recess, the judgment has been held over until September at the earliest. The cost burden of the case has been significant with £2m being incurred during the half year to 30 June,” the company said.