Randall and Quilter Investment dives on massive impairment charge

Shares in Randall and Quilter Investment took a dive after the group posted a loss on ordinary activities following an impairment charge, plunging the company into the red.

A pre-tax profit (PTP) on activities on 2010 of £7.5m turned to a loss of £4.7m, equal to loss per share (EPS) of 0.9p (2010: +12.2p). The market had been expecting a PTP of £8.31m and EPS of 12.60p.

Total income rose from £32.8m to £36.8m, short of expectations of £39.10m, hit by a goodwill impairment charge of £13.46m, which was due to the continued low market yields on high quality fixed income securities and the acceleration in settlement of known claims during 2011, which resulted in much lower than anticipated cash and investment balances by year end.

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"Whilst investment markets were and remain challenging, percentage returns on funds held by our insurance company subsidiaries remained stable at 3.0% overall (2010: 3.0%), significantly above the Lloyd's market average of 1.9%," the company said.

"Total investment income however fell, reflecting a significant reduction in average balances held."

R&Q was keen to emphasise that its Insurance Investments division performed very well, generating an operating profit of £8.3m (2010: £7.4m), driven by strong net reserve releases in the UK portfolios.

No dividend will be paid, a disappointment for investors who had been expecting something around the 8.09p-per-share mark.

The firm also announced that it has agreed to acquire the entire issued share capital of Trimac Acceptance and its wholly owned subsidiary, Trimac Exit Insurance, a Barbados domiciled captive insurer, for $2.7m.

NR