CBL Insurance IPO

[JoeGrogan]

For what it is worth - Share price did break a week ago through the MA100 and so far seems to hold. Lets take this as the first good technical indicator in some time - shall we?

Trading in quite a tight range for the last couple of months too, a breakdown or break up on the cards? not till the next update i guess...

[BlackPeter]

Trading in quite a tight range for the last couple of months too, a breakdown or break up on the cards? not till the next update i guess...

Probably - another month or so to wait for the FY results. If we assume they look as good as the analysts expect, and that they don't keep too much more as reserve, than SP should go up from there ...

[sb9]

Another day of decent accumulation at marginally higher price. Looks like someone taking decent stake before the results are out next month.

[Longhaul]

Funny stock this... why is liquidity so low? Is it just because insurance isn't interesting?

Holding since low 3's and nice to see it move up but don't really have a good feel for it yet.

[hardt]

Funny stock this... why is liquidity so low? Is it just because insurance isn't interesting?

Holding since low 3's and nice to see it move up but don't really have a good feel for it yet.

Tiny float, low dividend TTM and a fat write down recently are not pretty enough to catch the eye.
You get to appreciate CBL by delving into their reports...

Not a very well understood business by most... nor do they have the most transparent outlook either.

The move into Indian infrastructure guarantee bonds and surety presents an incredible opportunity moving forward.
https://www.pwc.in/assets/pdfs/infrastructure-in-india.pdf

I have far too much riding on CBL, kept buying up every time it hit that 2.90-2.95 sweet spot.

Happy to hold for a long, long, long time.

[Longhaul]

Tiny float, low dividend TTM and a fat write down recently are not pretty enough to catch the eye.
You get to appreciate CBL by delving into their reports...

Not a very well understood business by most... nor do they have the most transparent outlook either.

The move into Indian infrastructure guarantee bonds and surety presents an incredible opportunity moving forward.
https://www.pwc.in/assets/pdfs/infrastructure-in-india.pdf

I have far too much riding on CBL, kept buying up every time it hit that 2.90-2.95 sweet spot.

Happy to hold for a long, long, long time.

Yes, chart is definitely not a pretty one but I took a leap assuming it had bottomed out. International growth prospects look very interesting as you've said.

Hopefully the tiny float works out well for current holders, I feel like good news could really give this a bit of a lift. (But as always if I'm proven wrong I have a stop loss in place!).

[hardt]

Yes, chart is definitely not a pretty one but I took a leap assuming it had bottomed out. International growth prospects look very interesting as you've said.

Hopefully the tiny float works out well for current holders, I feel like good news could really give this a bit of a lift. (But as always if I'm proven wrong I have a stop loss in place!).

Understandable... the problem is, we really do not know how they are tracking as outlooks and updates are few and far between

Forecasting in their line of work would be quite a difficult undertaking and I don't think they are keen on shooting themselves in the foot.

Agree with you on any solid, good news with this few sellers could move it into 350+.... same goes for bad news heading below 300 ( HOPE THAT STOP LOSS IS MKT PRICE AND NOT LIMIT PRICE )

[JoeGrogan]

Yes, chart is definitely not a pretty one but I took a leap assuming it had bottomed out. International growth prospects look very interesting as you've said.

Hopefully the tiny float works out well for current holders, I feel like good news could really give this a bit of a lift. (But as always if I'm proven wrong I have a stop loss in place!).

I feel like this will be going sideways for a wee while, unless 2HY is massive or they give detailed forecasts for next year (which i guess is difficult due the nature of the business). The forecast on 4traders of 42m NPAT for FY17 won't be achieved imo, even if the reserve payment is taken off this 42m forecast - making it 31m odd. Which would require roughly a 19m 2HY NPAT, a 50% increase over the prior period.

Therefore, i don't think we will see a massive year of growth until next year. I know NZFC has a lot invested in this but do they have an analyst outlook on CBL?

Disc: hold a decent amount.

[Longhaul]

( HOPE THAT STOP LOSS IS MKT PRICE AND NOT LIMIT PRICE )

Hah, yes. I always keep a close eye on the escape hatch in case of emergency.

[hardt]

I feel like this will be going sideways for a wee while, unless 2HY is massive or they give detailed forecasts for next year (which i guess is difficult due the nature of the business). The forecast on 4traders of 42m NPAT for FY17 won't be achieved imo, even if the reserve payment is taken off this 42m forecast - making it 31m odd. Which would require roughly a 19m 2HY NPAT, a 50% increase over the prior period.

Therefore, i don't think we will see a massive year of growth until next year. I know NZFC has a lot invested in this but do they have an analyst outlook on CBL?

Disc: hold a decent amount.

I believe CBL had 23M in normalised NPAT 1H18...

9440

[JoeGrogan]

I believe CBL had 23M in normalised NPAT 1H18...

9440

What's your point? Are You saying the 42m forecast is normalised NPAT? Normalised NPAT for FY16 was 46.7m - 1HY16 was 23.2m and 23.7m for 2Y16, albeit benefiting from currency conditions (which the market doesn't seem to care for) and the no tax effect from write downs. Doesn't seem to be all that riveting having 23.6m normalised NPAT 1H17...

Therefore, regardless of whether normalised or IFRS NPAT is used as the measurement, i feel there needs to be massive growth in both for the 2HY17 period, in order for the SP to see favourable action.

[hardt]

What's your point? Are You saying the 42m forecast is normalised NPAT? Normalised NPAT for FY16 was 46.7m - 1HY16 was 23.2m and 23.7m for 2Y16, albeit benefiting from currency conditions (which the market doesn't seem to care for) and the no tax effect from write downs. Doesn't seem to be all that riveting having 23.6m normalised NPAT 1H17...

Therefore, regardless of whether normalised or IFRS NPAT is used as the measurement, i feel there needs to be massive growth in both for the 2HY17 period, in order for the SP to see favourable action.

Where did you get 46.7m in FY16 from?

I might be working with dud numbers here as it was stating normalised 38.3m FY16

[sb9]

Understandable... the problem is, we really do not know how they are tracking as outlooks and updates are few and far between

Forecasting in their line of work would be quite a difficult undertaking and I don't think they are keen on shooting themselves in the foot.

Agree with you on any solid, good news with this few sellers could move it into 350+.... same goes for bad news heading below 300 ( HOPE THAT STOP LOSS IS MKT PRICE AND NOT LIMIT PRICE )

I don't think they can afford another bit of bad news / unexpected write off like the one they had last year. Until that time the sp was tracking along nicely in high 3s...and bang came the bad news re write off.

[JoeGrogan]

Where did you get 46.7m in FY16 from?

I might be working with dud numbers here as it was stating normalised 38.3m FY16

Slide 7 of this report

http://cblcorporation.co.nz/UserFiles/CBLCorporation/File/CBL%202016%20Results%20Presentation.pdf

p.s. let me know if the link works because i'm having trouble linking pdf's in this browser

[BlackPeter]

I don't think they can afford another bit of bad news / unexpected write off like the one they had last year. Until that time the sp was tracking along nicely in high 3s...and bang came the bad news re write off.

What write off are you referring to? From memory - the only thing they did is using some of their earnings to increase their reserves. Looked like a wise move to me, but I agree, they could have done that over time in smaller increments.

[winner69]

You guys enthusiasm for CBL piqued my interestv....mybe CBL is different from most insurance type companies.

Investment in insurors never really been my thing .... make money on the premiums sitting on the bank and hope you come out ahead on one's claims experience. And then accounts are basically a guess anyway (acturial assumptions and all that) so always hard to understand what the real picture is.

But I pressed on but after trying to uderstand this document CBL is not for me
https://stocknessmonster.com/announcements/cbl.nzx-311362/

I take it you guys have a decent feel for how things work ....good on you.

[BlackPeter]

YOUour guys enthusiasm for CBL piqued my interestv....mybe CBL is different from most insurance type companies.

Investment in insurors never really been my thing .... make money on the premiums sitting on the bank and hope you come out ahead on one's claims experience. And then accounts are basically a guess anyway (acturial assumptions and all that) so always hard to understand what the real picture is.

But I pressed on but after trying to uderstand this document CBL is not for me
https://stocknessmonster.com/announcements/cbl.nzx-311362/

I take it you guys have a decent feel for how things work ....good on you.

You know - it's not always the companies with the most glossy and colorful presentation which deliver the best results ;);

[hardt]

Slide 7 of this report

http://cblcorporation.co.nz/UserFiles/CBLCorporation/File/CBL%202016%20Results%20Presentation.pdf

p.s. let me know if the link works because i'm having trouble linking pdf's in this browser

Not sure how I missed that one!... maybe I have selective vision.

Either way, the underlying business is more than strong and shows a lot of potential moving forward.
I also don't think this FY will be pretty to look at initially but as always, the machines operations are all sweet.

I know FNZC is a buy with a 370 or something PT and Forbarr neutral with ~350
Anyone know the 3rd broker covering this one?
As collectively their forecasts for FY18 averages out at 73M NPAT.

[winner69]

You know - it's not always the companies with the most glossy and colorful presentation which deliver the best results ;);

Wasn’t the most glossy and colourful preso was it

But full of technical stuff about what they do and how they report the numbers

Good on you guys for understanding all this

But betcha only a couple of people, if that, have a real feel for how things are progressing

But then the main guys have been doing this successfully for a long time so unless something blows up in their faces will be at in years to come.

[macduffy]

You make a good point, winner. I've managed to miss out on some great opportunities over the years by observing the rule - Don't invest in anything you don't fully understand.

Disc: Still have a few CBL

;)

[winner69]

Go out for the morning and come home and go and put an order in for a few CBL and bugger me a TRADING HALT pending an announcement

Either my dilly dallying around has cost me heaps ....or been saved by the skin of my teeth

Betcha it’s all good news ..bugger, will have to pay more now

[hardt]

Go out for the morning and come home and go and put an order in for a few CBL and bugger me a TRADING HALT pending an announcement

Either my dilly dallying around has cost me heaps ....or been saved by the skin of my teeth

Betcha it’s all good news ..bugger, will have to pay more now


Would not be so sure haha.

We will assume the worst... that way expectations are only met or exceeded.

[winner69]

No announcement on ASX yet

[sb9]

Go out for the morning and come home and go and put an order in for a few CBL and bugger me a TRADING HALT pending an announcement

Either my dilly dallying around has cost me heaps ....or been saved by the skin of my teeth

Betcha it’s all good news ..bugger, will have to pay more now

Hmmm...interesting timing of announcement just few weeks before the results are due, not sure what to expect bad news, good news, capital raise or something else???

[sb9]

No announcement on ASX yet

Yes that's correct, nothing released to ASX yet, interesting.....

[hardt]

Hmmm...interesting timing of announcement just few weeks before the results are due, not sure what to expect bad news, good news, capital raise or something else???

Few weeks out from the announcement... more often than not that is not a good sign.

Hoping for a cap raise for another round of acquisitions.

[JoeGrogan]

uh oh, not something you really want to see with an insurance company.

[sb9]

Few weeks out from the announcement... more often than not that is not a good sign.

Yes, I'm leaning towards that thinking as well...expecting bad news myself.

[JoeGrogan]

Oh the ASX announcement it says it is to do with the FY results expectations

[hardt]

Oh the ASX announcement it says it is to do with the FY results expectations

Announcement due on Monday.

I am not expecting a pretty picture... better deal with it on the day than to bother guessing what it will look like.

[sb9]

Oh the ASX announcement it says it is to do with the FY results expectations

Its quite funny how they have to give bit more information on the reason for trading halt on ASX, whereas no such requirement for NZX.

[winner69]

Probably a asset writedown of some sort ....but as long as its a non cash adjustment no worries as 'normalised' underlying profit won't be affected

[JoeGrogan]

Its quite funny how they have to give bit more information on the reason for trading halt on ASX, whereas no such requirement for NZX.

Agreed the NZX requirements are pretty pathetic to be honest

[winner69]

With Monday being a ‘holiday’ and having a long weekend CBL might be going to do the ‘announce bad news on 5pm Friday before a long weekend and hope nobody notices’ trick

I fear not - probably havevto sweat on it over the weekend.

Might put in a buy order at $3.00 ....no it should be $2.75 .....to catch those that panic sell when it starts trading again.

[sb9]

With Monday being a ‘holiday’ and having a long weekend CBL might be going to do the ‘announce bad news on 5pm Friday before a long weekend and hope nobody notices’ trick

I fear not - probably havevto sweat on it over the weekend.

Might put in a buy order at $3.00 ....no it should be $2.75 .....to catch those that panic sell when it starts trading again.

Public holiday on Tuesday not Monday winner....so we'll know the update Monday morning.

[winner69]

Public holiday on Tuesday not Monday winner....so we'll know the update Monday morning.

Yes I know that ...but the big end of town essentially will be taking a 4 day weekend ...and hopefully not worrying about CBL on Monday

[jg8512]

why do you need to go into trading halt to release a trading update?

BGP just one fired one out at 11.04 this morning. Much better to do it well before the market opens, but nonetheless, I'm not sure why CBL has asked for a halt just to update on trading?

[BlackPeter]

why do you need to go into trading halt to release a trading update?

BGP just one fired one out at 11.04 this morning. Much better to do it well before the market opens, but nonetheless, I'm not sure why CBL has asked for a halt just to update on trading?

A typical reason would be if some people (like employers, contractors, staff in companies they work with) have material information impacting the companies performance (good or bad), but the company still needs a bit of time to quantify the impact.

During this time they better halt trading, otherwise the company opens itself to potential damage claims.

BTW - if we hope that there was already some leaking ... SP went up recently - i.e. could be good news ;);

Discl: Most people call me pessimist, but I think I am a realist. However - who knows, I might be just a plain vanilla optimist :scared:.

[winner69]

A typical reason would be if some people (like employers, contractors, staff in companies they work with) have material information impacting the companies performance (good or bad), but the company still needs a bit of time to quantify the impact.

During this time they better halt trading, otherwise the company opens itself to potential damage claims.

BTW - if we hope that there was already some leaking ... SP went up recently - i.e. could be good news ;);

Discl: Most people call me pessimist, but I think I am a realist. However - who knows, I might be just a plain vanilla optimist :scared:.

.....and probably having a Board get together to go over the announcement (esp if it’s really really bad)

If it is bad those who bought this morning pre halt will be a bit pissed ...

[pierre]

If it's a trading update and it's good news it's pretty easy to come out and say it. If it's bad news the story needs a bit of polish before it's released.

However, it could be a takeover - one way or the other - or some other corporate activity and the details are being finalized over the weekend.

Whatever, Monday morning will be interesting.

DISCL: I'm exposed but only 1% of my portfolio so not too fussed either way.

[winner69]

If it's a trading update and it's good news it's pretty easy to come out and say it. If it's bad news the story needs a bit of polish before it's released.

However, it could be a takeover - one way or the other - or some other corporate activity and the details are being finalized over the weekend.

Whatever, Monday morning will be interesting.

DISCL: I'm exposed but only 1% of my portfolio so not too fussed either way.

......did mention an update of F17 profit expectations

SO its likely about that and not a takeover or anything

[NZSilver]

from ASX trading halt says so CBL can update FY17 results (my gut feeling would be bad news). I have been watching this company for nearly a year now looking to buy and nearly did this week but decided the trend was still not my friend. Will be an interesting announcement

[BlackPeter]

......did mention an update of F18 profit expectations

SO its likely about that and not a takeover or anything

Actually - they did mention FY17 (i.e. not F18) result expectations :);

https://www.asx.com.au/asxpdf/20180202/pdf/43r93xpcgs217m.pdf

[winner69]

Actually - they did mention FY17 (i.e. not F18) result expectations :);

https://www.asx.com.au/asxpdf/20180202/pdf/43r93xpcgs217m.pdf course were awaiting FY17

Me bad again ....off course we were waiting for a fantastic FY17 result. Years past by faster as you get older

At this late stage maybe having troubles with auditors and debating what assumptions are realistic (or not)

One would have to say material one way or the other

[winner69]

What were FY17 expectations anyway?

[pierre]

......did mention an update of F17 profit expectations

SO its likely about that and not a takeover or anything


OK - only read the NZX document which tells us nothing about the reason for the halt. Doesn't sound like it will be good news then.

[hardt]

What were FY17 expectations anyway?

no concrete forecasts if I remember correctly...

Vague outlooks certainly require updates... expectations seemed to be fairly upbeat from brokers.

Miniscule chance that this is a good announcement IMO

[JoeGrogan]

Since guidance was so vague it leads me to believe this has to be pretty bad in order for a trading halt to occur.

... ah well, Winner you can have mine for 275.

[winner69]

Since guidance was so vague it leads me to believe this has to be pretty bad in order for a trading halt to occur.

... ah well, Winner you can have mine for 275.

After what’s happened on the US markets overnight might lower it to 250

Still interested?

[BlackPeter]

What were FY17 expectations anyway?

No concrete company forecasts as far as I know, but from memory there is an ASX rule that (ASX-) listed companies need to make announcements if they know that their performance will be more than 10 (or 15?)% off the publicly available analyst consensus.

This might be as well the reason that they gave a reason for the halt on ASX, but not on NZX (not a NZX rule).

Analyst consensus for CBL FY17 is according to 4traders:
http://www.4-traders.com/CBL-CORPORATION-LTD-26405978/financials/

Revenue 358m (up from 264m in 2016) and NPAT 42m (up from 29.7m in 2016).

Maybe somebody just recently discovered on board level this ASX listing requirement? Otherwise I can't really imagine that they would need more than one month after the end of the financial year to find whether revenue / earnings numbers are quite different to the analyst forecasts ...

Ah well, I guess tomorrow we will know more ...

[winner69]

No concrete company forecasts as far as I know, but from memory there is an ASX rule that (ASX-) listed companies need to make announcements if they know that their performance will be more than 10 (or 15?)% off the publicly available analyst consensus.

This might be as well the reason that they gave a reason for the halt on ASX, but not on NZX (not a NZX rule).

Analyst consensus for CBL FY17 is according to 4traders:
http://www.4-traders.com/CBL-CORPORATION-LTD-26405978/financials/

Revenue 358m (up from 264m in 2016) and NPAT 42m (up from 29.7m in 2016).

Maybe somebody just recently discovered on board level this ASX listing requirement? Otherwise I can't really imagine that they would need more than one month after the end of the financial year to find whether revenue / earnings numbers are quite different to the analyst forecasts ...

Ah well, I guess tomorrow we will know more ...

NZX continuous disclosure rules / guidelines are pretty much the same as the ASX

Yes the 10%/15% is used as a general guideline as to materiality of financial performance .....could be v prior year, company stated guidance/forecasts or market expectations (analysts) etc.

When disclosures are made is important ..like as soon as the CEO and CFO are aware.

My reading is that CBL have a large writedown or something like that rather than day to day performance.

Google NZX Continuous Disclosures and I’m sure you will find plenty of guff.

Hope a Scheme of Arrangement hasn’t been entered into eh!!!

[JoeGrogan]

No concrete company forecasts as far as I know, but from memory there is an ASX rule that (ASX-) listed companies need to make announcements if they know that their performance will be more than 10 (or 15?)% off the publicly available analyst consensus.

This might be as well the reason that they gave a reason for the halt on ASX, but not on NZX (not a NZX rule).

Analyst consensus for CBL FY17 is according to 4traders:
http://www.4-traders.com/CBL-CORPORATION-LTD-26405978/financials/

Revenue 358m (up from 264m in 2016) and NPAT 42m (up from 29.7m in 2016).

Maybe somebody just recently discovered on board level this ASX listing requirement? Otherwise I can't really imagine that they would need more than one month after the end of the financial year to find whether revenue / earnings numbers are quite different to the analyst forecasts ...

Ah well, I guess tomorrow we will know more ...

As Winner said the same rules apply for the NZX, 10% is normally used as a basis to help define materiality.

I think it was pretty obvious that CBL weren't going to meet these analyst consensus based on the 1HY17, so i don't think a trading halt would of been used just to disclose this. Also they missed analyst forecasts last year by well more than 10 percent and did not go into a trading halt - who knows maybe they learn't after last year's FY result that maybe it is wise to disclose one off's even if they are smallish?

However, I think this is pointing to a major one off cost... well not too much longer till we find out.

[winner69]

As Winner said the same rules apply for the NZX, 10% is normally used as a basis to help define materiality.

I think it was pretty obvious that CBL weren't going to meet these analyst consensus based on the 1HY17, so i don't think a trading halt would of been used just to disclose this. Also they missed analyst forecasts last year by well more than 10 percent and did not go into a trading halt - who knows maybe they learn't after last year's FY result that maybe it is wise to disclose one off's even if they are smallish?

However, I think this is pointing to a major one off cost... well not too much longer till we find out.

As long as it’s a one off and ‘non cash’ wont be so bad

Market will just look at ‘normalised’ and ‘underlying’ numbers

Hope if it’s bad there will be panic and I get my $2.50/$2.75

[winner69]

Revenue growth in excess of 35% higher than expectations

That’s very very good news

[winner69]

Capital raising To come soon

Save up your pennies

[horus1]

It doesn't look like good news to me. Looks like they have underestimated the claims and been caught out, profitability lower?? and a capital raise. Are you sure winner 69. Don't hold any shares.

[winner69]

Hmmm ... one-off write-off of receivables of approx. $44m arising from broker/insurer/reinsurer reconciliations and related differences arising from a detailed post-acquisition examination of SFS throughout 2017.

Due diligence a bit weak?

[winner69]

It doesn't look like good news to me. Looks like they have underestimated the claims and been caught out, profitability lower?? and a capital raise. Are you sure winner 69. Don't hold any shares.

Maybe at $2.20 horus.

Future looks bright the head honcho said

[winner69]

Suppose media will focus on the $85m loss ...ouch

[babymonster]

disappointed. not a good look for 2H.. this is the third time they didn't get it right?

[winner69]

This bit a worry — assuming RBNZ is Reserve Bank of New Zealand — not good when they get worried about how solid insurance companies are

As a result of Elite being placed in solvent run-off, the RBNZ has commissioned an independent report by a skilled expert. We are unaware of when that report will be available. We believe that this report will support CBL’s decision to materially increase future claims reserves.

[BlackPeter]

Hmmm ... one-off write-off of receivables of approx. $44m arising from broker/insurer/reinsurer reconciliations and related differences arising from a detailed post-acquisition examination of SFS throughout 2017.

Due diligence a bit weak?

Add to that the $100m reserve strengthening to cover "a long tail" of potential claims in the French construction industry.

Just wondering - isn't this already the second "one-off" reserve strengthening this year? How often can they repeat "one-off"s before they turn into regular occurrences?

One hopes that they got it right this time, or is this as well one of these things typically coming in three's?

[winner69]

Wasn’t the most glossy and colourful preso was it

But full of technical stuff about what they do and how they report the numbers

Good on you guys for understanding all this

But betcha only a couple of people, if that, have a real feel for how things are progressing

But then the main guys have been doing this successfully for a long time so unless something blows up in their faces will be at in years to come.

After today’s announcement I have my doubts that even those couple of people didn’t have a real feel for how things are going

If they did their silence has been deafening

All this **** didn’t happen last week

[winner69]

Add to that the $100m reserve strengthening to cover "a long tail" of potential claims in the French construction industry.

Just wondering - isn't this already the second "one-off" reserve strengthening this year? How often can they repeat "one-off"s before they turn into regular occurrences?

One hopes that they got it right this time, or is this as well one of these things typically coming in three's?

There was $16.5m strengthening last August ....don’t know if for same thing or not

These things don’t come in threes .....seems to suggest an systemic breakdown in processes or something

A tiger never change its stripes they say — I think this applies here

[winner69]

Looking forward I hope the new Indian surety and performance guarantee bonds aren’t a ticking time bomb as well

[Lola]

Hmmm ... one-off write-off of receivables of approx. $44m arising from broker/insurer/reinsurer reconciliations and related differences arising from a detailed post-acquisition examination of SFS throughout 2017.

Due diligence a bit weak?
Remind me who were the lead Broker promoter of this listing?

[winner69]

Remind me who were the lead Broker promoter of this listing?

Enough said

[hardt]

Winner you seem to be both yin and yang this morning haha.
Not the worst case scenario I was playing out for this morning...
The idea of actuaries getting the ratios wrong in earlier days is not a new problem for insurers.

"one-off future claims reserve catch-up adjustment to take intoaccount potential future claims over the next 10-12 years in respect of policies written in previous years"

Expecting nothing but an overreaction from the market today as always.

The operating metrics would have been nice to see today though, the GWP growth is incredible and they are clearly picking up globally.
Just got to iron out those pesky ghosts from yesteryears policies.

[winner69]

Long wait for those who might be interested in buying shares ...or dumping them

At least Friday they say

[winner69]

CBL has advised NZX that CBL has received the results of a report it commissioned in respect to its reserving, and the recommendation of this report is to strengthen the reserves of CBL’s French business. CBL has advised NZX that the Board of CBL considers that a capital raising is appropriate to strengthen reserves and also to ensure sufficient capital strength to enable CBL to continue its growth. A process is currently underway with respect to adjustments to reserving and major shareholder discussions; accordingly, CBL has requested that a trading halt be put in place to ensure an orderly market for CBL’s shares while discussions with major shareholders take place.

Wouldn’t think CBL in a very strong position in these discussions with major shareholders....wonder what sort of discount to $3.60 odd

[winner69]

Winner you seem to be both yin and yang this morning haha.
Not the worst case scenario I was playing out for this morning...
The idea of actuaries getting the ratios wrong in earlier days is not a new problem for insurers.

"one-off future claims reserve catch-up adjustment to take intoaccount potential future claims over the next 10-12 years in respect of policies written in previous years"

Expecting nothing but an overreaction from the market today as always.

The operating metrics would have been nice to see today though, the GWP growth is incredible and they are clearly picking up globally.
Just got to iron out those pesky ghosts from yesteryears policies.

Yep, future looks good ...but you know hardt that ‘pesky ghosts’ seldom go away, esp in the insurance game

Won’t CBL have a bit of credibility problem from here on in which will be reflected in the share price.

[winner69]

Last big cap raising was at $3.45 by the looks of it — September 2016

[winner69]

Peter Harris will be gutted having to own up to this disaster

Suppose shareholders aren’t too happy either

[Balance]

Winner you seem to be both yin and yang this morning haha.
Not the worst case scenario I was playing out for this morning...
The idea of actuaries getting the ratios wrong in earlier days is not a new problem for insurers.

"one-off future claims reserve catch-up adjustment to take intoaccount potential future claims over the next 10-12 years in respect of policies written in previous years"

Expecting nothing but an overreaction from the market today as always.

The operating metrics would have been nice to see today though, the GWP growth is incredible and they are clearly picking up globally.
Just got to iron out those pesky ghosts from yesteryears policies.

Downgrades come in threes - never forget that.

[trader_jackson]

I have heard things regarding some of the managers/directors pasts... lets just say I think they are "questionable" which is the reason why I'm not investing, unfortunately, because I did initially like it.

I am also a little worried why CBL are so "hell bent" to get itself listed while they know it is a volatile/tough market... if it was such a great company why not wait till early next year (only a couple months away...) when things have stabilized and therefore are able to receive a higher price and more capital (Yes I know they say "they are looking for long term investors and don't care about short term volatility" but this just doesn't wash with me...)

Anyway that's just some food for thought, because I don't "have a good feeling" about CBL (as a result of the above), I'm out.

Posted prior to listing (nearly 2 and a half years ago).
At first it seemed I was very wrong, and the share price 'only' went up... but now seems the wheels are showing signs of falling off...

[winner69]

Last Balance Sheet had Equity at $302m

A $85m loss will put a big dent in that — wonder how big the capital raise will be?

Reading between the lines the RBNZ May have had concerns that even $302m wasn’t sufficient

[winner69]

Posted prior to listing (nearly 2 and a half years ago).
At first it seemed I was very wrong, and the share price 'only' went up... but now seems the wheels are showing signs of falling off...

‘Good feeling’ or gut feel goes a long way ...and invariably right

I note my ‘gut feels’ (about many things in life) and then note what happens a year or so on. My score is that I’ve been right about 85% of the time

Re your original post — I remember saying something similar about Oceania. Just saying

[winner69]

Floated October 2015 with a market cap of $340m ($1.55 share price)— market cap last week $747m

Wonder what market cap will be next week

[Joshuatree]

‘Good feeling’ or gut feel goes a long way ...and invariably right

I note my ‘gut feels’ (about many things in life) and then note what happens a year or so on. My score is that I’ve been right about 85% of the time

Re your original post — I remember saying something similar about Oceania. Just saying

Your guts let you down there W69. Oceania listed at 79c currently $1.01 a 28% gain in re 9 months.

[winner69]

Your guts let you down there W69. Oceania listed at 79c currently $1.01 a 28% gain in re 9 months.

Yes like CBL listed at $1.55 and now $3.17 so t_j has missed out big time as well following his feelings.

Maybe OCA might be 80 cents again

[Joshuatree]

TJ "I have heard things regarding some of the managers/directors pasts... lets just say I think they are "questionable" which is the reason why I'm not investing, unfortunately, because I did initially like it."

More on the info he had then intuition/feelings. For me i find im more right if i add up the facts and then listen just a little to my intuition rather than just following them alone but i find it an interesting subject, discussion.

[winner69]

TJ "I have heard things regarding some of the managers/directors pasts... lets just say I think they are "questionable" which is the reason why I'm not investing, unfortunately, because I did initially like it."

More on the info he had then intuition/feelings. For me i find im more right if i add up the facts and then listen just a little to my intuition rather than just following them alone but i find it an interesting subject, discussion.

Suppose that’s what I do in the short to medium term because it can take years before one is proved right or wrong

And is an interesting subject

[Lola]

Peter Harris will be gutted having to own up to this disaster

Suppose shareholders aren’t too happy either

Shouldn’t be too much of a worry as he managed to sell 5m in April 2017
Probably bought by Harbour
Troubles in Europe came to light in July apparently
Harbour were still soaking these darts up late in 2017

[Grunter]

CBL is a liability insurer, which means that they are exposed to long-tail risk, the most feared exposure in the insurance industry, and portfolio contagion, meaning that because they write a specialist area of cover, they are exposed to aggregation within their portfolio of a specific type of risk, which could eventuate from left field on a widespread scale.

Recovering from counter parties means subrogating against the contractors/project managers/construction firms that will have professional indemnity cover for their liabilities. Thus CBL should be able to recover some of their costs of paying claims from third parties.

seems that tail is getting ready to wag.

further note, CBL has large exposures to surety risk in the construction sector. A downturn in the sector could cause a tsunami of claims against CBL.

[Hectorplains]

Shouldn’t be too much of a worry as he managed to sell 5m in April 2017
Probably bought by Harbour
Troubles in Europe came to light in July apparently
Harbour were still soaking these darts up late in 2017

It appears he invested some of that in obtuse writing classes. What an impenetrable announcement... So many words to say, what Benaud would've given in 5, "He got his sums wrong." The worry is no mention of how this happened.

[whatsup]

Winner interesting times head

[winner69]

Terrible timing for a capital raise -- especially for how much CBL might need

Expect the trading halt to be extended into next week methinks

[Joshuatree]

Here are the details from todays ASX annoucement
Reason for voluntary suspension – the Company has received the results of a report it commissionedto review the actuarial assumptions applicable to CBL Insurance Limited’s ongoing French Constructioninsurance business and the recommendation of this report is to strengthen the future claims reserves ofCBL Insurance Limited. The Board of the Company considers that a capital raising is appropriate tostrengthen future claims reserves and also to ensure sufficient capital strength to enable the Company tocontinue its growth (Proposed Capital Raising). Because a process is currently underway with respectto adjustments to future claims reserves and major shareholder discussions, the Company requests thatASX place the Company's Shares into voluntary suspension to ensure an orderly market for theCompany's Shares while discussions with major shareholders take place.

[winner69]

Why I mentioned an extension to next week because they hinted at trading again this week

NZX Regulation (“NZXR”) advises that further to the memorandum released on Friday, 2 February 2018, and the announcement released by CBL this morning, the trading halt on CBL Corporation Limited ordinary shares (“CBL”) will remain in place until an announcement by CBL regarding its expectations with respect to a capital raising (anticipated to be on or before Thursday 8 February 2018), at which time it is likely the halt will be lifted. The halt will be lifted by no later than market open on Friday 9 February 2018.

[Lola]

Why I mentioned an extension to next week because they hinted at trading again this week

NZX Regulation (“NZXR”) advises that further to the memorandum released on Friday, 2 February 2018, and the announcement released by CBL this morning, the trading halt on CBL Corporation Limited ordinary shares (“CBL”) will remain in place until an announcement by CBL regarding its expectations with respect to a capital raising (anticipated to be on or before Thursday 8 February 2018), at which time it is likely the halt will be lifted. The halt will be lifted by no later than market open on Friday 9 February 2018.

Forbar discretionaries and FNZ and management will probably “underwrite “ this.
Price?
1.55....just a guess

[Hectorplains]

Forbar discretionaries and FNZ and management will probably “underwrite “ this.
Price?
1.55....just a guess

This has that whiff of eau de intueri about it.

[Lola]

This has that whiff of eau de intueri about it.

And perhaps a hint of eau de Feltex too?

[winner69]

It appears he invested some of that in obtuse writing classes. What an impenetrable announcement... So many words to say, what Benaud would've given in 5, "He got his sums wrong." The worry is no mention of how this happened.

Yep, makes you wonder if “he got his sums wrong” extends to their ‘ability to assess risk’

Bit of a worry going forward

[Joshuatree]

My god this has been a dodgy story for quite some time.Not looking forward to the future here.:scared:

CBL update on RBNZ review, CBI, and rating downgrade 2 pages 547.9KB (https://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01948403)

[Lola]

My god this has been a dodgy story for quite some time.Not looking forward to the future here.:scared:

CBL update on RBNZ review, CBI, and rating downgrade 2 pages 547.9KB (https://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01948403)


MMM... this report states that CBL took a strategic decision in Feb 2017 to move away from Elite.
Then in April came the 20m shares sell down.

Agree more to come as this unfolds.

[winner69]

Reading those announcements suggests they need heaps more capital ....seeing RBNZ and Ireland thought they needed more andvthats before the big loss was known.

Maybe new shares less than $1.15 eh Lola

[hardt]

Regulators coming into play, solvency margin of 170% is now required ( not sure where the bar was beforehand )

The big reserve strengthening "exercise" is there to adequately cover risks taken on, not Armageddon.
You have to take on a lot more risk to kick revenues up 30+%




1H17



CBL Insurance








Solvency Capital

160,440



Solvency Margin

150.2%







ASSET INSURE








Solvency Capital

46,130



Solvency Margin

351.9%







CBLIE








Solvency Capital

22598



Solvency Margin

186.7%




Definitely a bad time to have shares in CBL... It is not the end of the world kind of stuff though ( a lot of you are so dramatic ).

The existing long-term risks that came with the SFS Acquisition and not their core business risks that are causing the headache here, SFS was underestimated and alas we are here.

The precautionary measure of increased solvency margin is required to keep regulators happy with the higher levels of risk found to have been taken on unknowingly.

[trader_jackson]

Forsyth reckon NZ$150-200m needed maybe a 1 for 3 on the cards?

[babymonster]

could be quite a bit of dilution, and might be hard to sell to instos...

[whatsup]

wasn't there meant to be a ann today ?

[Dassets]

With today's announcement re suspension means cap raise can't go ahead.

[Lola]

wasn't there meant to be a ann today ?

Shares suspended
See announcement this avo.

Not surprising given circumstances which are murky to say the least.

Placement followed by an SPP perhaps?

[winner69]

See the CFO resigned in November but said he would stay until end of April

Probably not enjoying his last days ....if he is still there

On another matter it Seem like NZX not happy with their past disclosures ....everybody been flying blind (investors as well as company management)

[hardt]

See the CFO resigned in November but said he would stay until end of April

Probably not enjoying his last days ....if he is still there

On another matter it Seem like NZX not happy with their past disclosures ....everybody been flying blind (investors as well as company management)

CBL is giving away as little as possible about their shortcomings before asking for money to cover them.

It is nice to see NZX actually doing something... I forgot they were even there.

Props to NZX here and I hope CBL are not being all too shady about the whole thing.
I think it would have been better if this issue was not be shrink wrapped in confidentiality by RBNZ so it could be discussed from the beginning findings to the end result.
Instead of us finding out it has been in the mix for a long time.

[sb9]

CBL is giving away as little as possible about their shortcomings before asking for money to cover them.

It is nice to see NZX actually doing something... I forgot they were even there.

Props to NZX here and I hope CBL are not being all too shady about the whole thing.
I think it would have been better if this issue was not be shrink wrapped in confidentiality by RBNZ so it could be discussed from the beginning findings to the end result.
Instead of us finding out it has been in the mix for a long time.

Dear o dear...what a mess, looks like they've been sweeping quite a bit of stuff under the carpet.

Thankfully disposed half of my holdings last year, can live with current exposure for a while.

Not a good start for 2018 for NZX with CBL and FBU in such shambles....

[winner69]

I would hazard a guess that the problem is so big that it is likely that a lot will need to come from new shareholders — ie a big dilution of existing share holders.

If they do indeed need $150m / $200m - $100m just to replace the impact of this year’s losses plus what’extra is going to be demanded) how do structure a rights issue when they 235m shares now? Maybe Lola is about right with his $1.15 ...with a 1 for 2. Need a gutsy underwriter I reckon.

[Brain]

It is best to retain your sense of humour at all times.

Does everybody remember this



http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11932453

[BlackPeter]

I would hazard a guess that the problem is so big that it is likely that a lot will need to come from new shareholders — ie a big dilution of existing share holders.

If they do indeed need $150m / $200m - $100m just to replace the impact of this year’s losses plus what’extra is going to be demanded) how do structure a rights issue when they 235m shares now? Maybe Lola is about right with his $1.15 ...with a 1 for 2. Need a gutsy underwriter I reckon.

Another problem with existing shareholder funding might be that management has a significant stake in the company (edit: just checked - the board holds together roughly 39%). While this is typically a good sign - I don't think they can stomp up many millions to pay their contribution for a share rise.

Whatever it is, it is a major clusterf*ck. Disappointed - I thought better of Peter Harris - the so called "entrepreneur of the year 2017"! Just wondering whether he returns his award? Somehow there seems to be a pattern - too often when these business men start to get awards it appears to be time for investors to go. Not sure whether the awards are jinxed - or whether (more likely) it is just a demonstration of the cluelessness of the people awarding them.

Have seen this in too many other companies before ... just from the top of my head: Southern Finance, Rakon, Tait, ah yes - Fletcher Building and now CBL.

Sad.

[Lola]

Another problem with existing shareholder funding might be that management has a significant stake in the company (edit: just checked - the board holds together roughly 39%). While this is typically a good sign - I don't think they can stomp up many millions to pay their contribution for a share rise.

Whatever it is, it is a major clusterf*ck. Disappointed - I thought better of Peter Harris - the so called "entrepreneur of the year 2017"! Just wondering whether he returns his award? Somehow there seems to be a pattern - too often when these business men start to get awards it appears to be time for investors to go. Not sure whether the awards are jinxed - or whether (more likely) it is just a demonstration of the cluelessness of the people awarding them.

Have seen this in too many other companies before ... just from the top of my head: Southern Finance, Rakon, Tait, ah yes - Fletcher Building and now CBL.

Sad.

Totally agree about these ego driven and " networking opportunity"awards. Accountants giving out and/or sponsoring entrepreneur awards is bizarre to start with...unless they have large receivership departments of course; that would make sense. INFINZ Award Evenings is another waste of effort, as are so many other "celebrations of excellence"events. I guess its the way these days...an award for everything, and everyone at least gets a mention if they dont come first.

I disagree that Mr Harris , and Mr Hutchinson , cant shake their family trees and stump up in this now certain go around. They liquidated $50 million plus between them last year. Maybe Harbour will make it a condition they do. I see FNZC are retained as primary advisers in this , and not the original Investment Bank/ Fund Manager. Its a little similar to Oceana Health and saw that entrepreneur main man there stump up.

Not sad. Normal business in a risky business...but really how good was the original DD? FMA please dial in.

[winner69]

Harris probably find an excuse not to attend the Global Final of that award in Monaco in June

[trader_jackson]

Posted prior to listing (nearly 2 and a half years ago).
At first it seemed I was very wrong, and the share price 'only' went up... but now seems the wheels are showing signs of falling off...

Not only are the wheels showing signs of falling off, but the vehcile inspector now wants more answers as well... things going from bad to worse.
Must have been that bad "feeling" I had way back in late September of 2015 now seems to be coming to light.
Not an investor, and have never been, but will be watching with interest.
May not have been just a "feeling" that put me off this

[winner69]

Suspension / trading halt weeks now

Just as well Beagle don’t own any shares in CBL

[Lola]

Suspension / trading halt weeks now

Just as well Beagle don’t own any shares in CBL

Maybe that Jeremy on Seven Sharp should interview the Chairman and together tell us whats going on?

[Balance]

Suspension / trading halt weeks now

Just as well Beagle don’t own any shares in CBL

Going to bew very very difficult to get any kind of capital raise away in these kind of market conditions.

Maybe at giveaway prices?

[kiwico]

So today's update (https://www.nzx.com/announcements/314053)isn't really an update....

12 February 2018

ASX SUSPENSION
CBL has requested that its shares remain in voluntary suspension in ASX (and their trading is also suspended on NZX). CBL is still working towards a capital raise, but the timing for this as well as the proposed amount have not been finalised, and are dependent on a range of factors including engagement with regulators and potential investors, which are likely to require a number of weeks. CBL will continue to update the market in this regard.

[peat]

shouldnt they keep trading. I was thinking with FBU as well why not let the market run. Sure there is uncertainty, like always, but the point of a market is to provide liquidity and with two decent stocks on the NZX suspended there is a failure to do that. Of course there may be a heap more insiders than usual but they will know who they are and should just stay schtum.

Or am I still wearing my cowboy hat from the 80's?

[macduffy]

Does it still fit, peat? My own headgear from those days doesn't get much wear these days!

I think the case for trading in an informed market over-trumps (sorry for that word) the liquid market argument?

[JoeGrogan]

There was an update at close on the asx for those interested

https://www.asx.com.au/asxpdf/20180213/pdf/43rk2ljczcv074.pdf

[trader_jackson]

There was an update at close on the asx for those interested

https://www.asx.com.au/asxpdf/20180213/pdf/43rk2ljczcv074.pdf

So they are exiting an apparently profitable business ("strategic acquisition" to put it in their exact words) they paid $150M (for 71%) barely 1 year ago and still raising capital and still being investigated by the FMA or something... my goodness me, this really is unbelievable... that big wig at CBL who won that big award at the end of last year surely must be in line for the opposite this year

If its a rights issue or SPP, better be careful what price they try raise capital at, might find they have nobody wanting to participate...
Any word on when trading will start again?

https://www.nzx.com/announcements/295252
Almost makes you laugh reading over this now... for all the wrong reasons

[Lola]

So they are exiting an apparently profitable business ("strategic acquisition" to put it in their exact words) they paid $150M (for 71%) barely 1 year ago and still raising capital and still being investigated by the FMA or something... my goodness me, this really is unbelievable... that big wig at CBL who won that big award at the end of last year surely must be in line for the opposite this year

If its a rights issue or SPP, better be careful what price they try raise capital at, might find they have nobody wanting to participate...
Any word on when trading will start again?

https://www.nzx.com/announcements/295252
Almost makes you laugh reading over this now... for all the wrong reasons

This is quite extraordinary.
Nobody from the Board had the sense of duty nor the guts to put their name to the ASX Announcement.
Yes , as said before, let us see the FMA Dial in on this apparent Pike River lookalike.
Leave NZX out of it. Too many conflicts for them.

[winner69]

This is quite extraordinary.
Nobody from the Board had the sense of duty nor the guts to put their name to the ASX Announcement.
Yes , as said before, let us see the FMA Dial in on this apparent Pike River lookalike.
Leave NZX out of it. Too many conflicts for them.

Yes quite extraordinary

The Board did consider 2 times and decided 1 time

[hardt]

Cutting the risk out completely mmm... tough decision probably made by those funding the cap raising.

Looking forward to seeing how they performed on paper.

[Balance]

Yes quite extraordinary

The Board did consider 2 times and decided 1 time

https://www.nzx.com/announcements/314269

Clever lady

[winner69]

https://www.nzx.com/announcements/314269

Clever lady

CFO keeping busy in his last few days before he leaves in April. Deserves a big bonus for remaking loyal.

[Lola]

Yes quite extraordinary

The Board did consider 2 times and decided 1 time

Wow Mr Hunter on fire in NBR today.
Very good bit by him.
Pleased I’m not a Managed Client so don’t own any of this tsunami.

[Well Endowed]

https://www.nbr.co.nz/article/cbl-ordered-cease-business-ireland-th-212844

[trader_jackson]

https://www.nbr.co.nz/article/cbl-ordered-cease-business-ireland-th-212844

This is going from worse, to even worse
The bad to worse phase has passed already

Will be interesting to see what the share price is once it finally comes out of a halt... the IPO price could look "expensive"
Very cunning to put a halt in place, then release a constant stream of bad news - even more bad news than the reason for the halt in the first place

[Hectorplains]

This is going from worse, to even worse
The bad to worse phase has passed already


Yeah, it's much more worser.
:p

[clilly4]

CBL Insurance Limited placed in liquidation
https://www.rbnz.govt.nz/news/2018/02/cbl-insurance-limited-placed-in-liquidation

[Balance]

cbl insurance limited placed in liquidation
https://www.rbnz.govt.nz/news/2018/02/cbl-insurance-limited-placed-in-liquidation

Why was this not announced to the market?

f r e a k i n g **** h e l l !

[trader_jackson]

CBL Insurance Limited placed in liquidation
https://www.rbnz.govt.nz/news/2018/02/cbl-insurance-limited-placed-in-liquidation

My goodness... this is truly not good... and all this time the shares have been halted
Sparks should fly big time - http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12000817
No worries... NZX website shows it at $3.17 a share with a market cap off $750m

[hardt]

ouchie... that probably should have been sent to the market right. :t_down:

Not that it matters now anyway.

[Balance]

My goodness... this is truly not good... and all this time the shares have been halted
Sparks should fly big time - http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12000817
No worries... NZX website shows it at $3.17 a share with a market cap off $750m

And to think that this company was worth nearly $1 billion a year ago!

[Balance]

ouchie... that probably should have been sent to the market right. :t_down:

Not that it matters now anyway.

https://stocknessmonster.com/announcements/cbl.nzx-312804/

Harbour Asset Management & F N Z Capital Securities - big casualty.

17.58m shares - $50m hit.

[BlackPeter]

CBL Insurance Limited placed in liquidation
https://www.rbnz.govt.nz/news/2018/02/cbl-insurance-limited-placed-in-liquidation

Ouch. As one of the shareholders of a now likely worthless share it looks I just took another very expensive lesson. Just trying to capture what I learned for my money:

1) If the estimated financials look too good to be true, they probably are ... even if we talk about a regulated and highly rated insurance company
2) If the CEO gets the entrepreneur of the year award it demonstrates that these awards are absolutely worthless and it is time for investors to run ...
3) If stock analysts rate a stock as "outperform" it just means that the CEO might be a nice bloke and that they don't understand rule 2)
4) Kiwi blokes are as capable as highly paid foreigners to run companies into the ground, and it is not more fun either (well, maybe for them);
5) Not sure what the RBNZ is doing to check insurance companies ... but whatever it is, it does not seem to work;
6) and ah, yes - ratings of credit rating agencies (a month ago still "A") have nothing to do with the financial situation of the rated company. The rating is just a nice (and expensive) letter. But hey, we knew that already since the GFC, didn't we?
7) If the directors of a company have lots of skin in the game it might just mean that they have been so far lucky (to make or inherit this money), not that they know what they are doing;

and - here is another one:
8) percy said he had a bad feeling about investing into insurance companies (talking about long tails) ... better listen to him next time

Phh - not normally that litigious, but I am wondering whether CBL board and management have been really that long that clueless. Due diligence? Continuous disclosure? I think it would be worthwhile for the SFO to look into this matter. Happy to fund as taxpayer some more prisons for a good cause.

[trader_jackson]

From day 1, I've only been skeptical. Kinda sad, I didn't want my skepticism to be 'right' and thought in October of 2016 when the share price had way more than doubled, that maybe for I was the one who was wrong about CBL... hmm well it would appear this really is the final nail in the coffin.

Not helping Forsyth's record either... they were one of the ones who helped get CBL listed...
At least Evolve Education, another one Forsyth brought to market, is still afloat for now.
That dog they brought to market, arvida or something, has done well at least

[Balance]

Ouch. As one of the shareholders of a now likely worthless share it looks I just took another very expensive lesson. Just trying to capture what I learned for my money:

1) If the estimated financials look too good to be true, they probably are ... even if we talk about a regulated and highly rated insurance company
2) If the CEO gets the entrepreneur of the year award it demonstrates that these awards are absolutely worthless and it is time for investors to run ...
3) If stock analysts rate a stock as "outperform" it just means that the CEO might be a nice bloke and that they don't understand rule 2)
4) Kiwi blokes are as capable as highly paid foreigners to run companies into the ground, and it is not more fun either (well, maybe for them);
5) Not sure what the RSNZ is doing to check insurance companies ... but whatever it is, it does not seem to work;
6) and ah, yes - ratings of credit rating agencies (a month ago still "A") have nothing to do with the financial situation of the rated company. The rating is just a nice (and expensive) letter. But hey, we knew that already since the GFC, didn't we?
7) If the directors of a company have lots of skin in the game it might just mean that they have been so far lucky (to make or inherit this money), not that they know what they are doing;

and - here is another one:
8) percy said he had a bad feeling about investing into insurance companies (talking about long tails) ... better listen to him next time

Phh - not normally that litigious, but I am wondering whether CBL board and management have been really that long that clueless. Due diligence? Continuous disclosure? I think it would be worthwhile for the SFO to look into this matter. Happy to fund as taxpayer some more prisons for a good cause.

https://www.nbr.co.nz/article/cbl-ordered-cease-business-ireland-th-212844

Read the comment #5 by Tony Gavigan - probably is the closest assessment of what CBL has been up to.

[Joshuatree]

Fark! How am i going to make up this loss, kind reminds me of climbing Mt Ngauruhoe, 2 steps up and 3 sliding down on the scree.:eek2:

[percy]

Ouch. As one of the shareholders of a now likely worthless share it looks I just took another very expensive lesson. Just trying to capture what I learned for my money:

1) If the estimated financials look too good to be true, they probably are ... even if we talk about a regulated and highly rated insurance company
2) If the CEO gets the entrepreneur of the year award it demonstrates that these awards are absolutely worthless and it is time for investors to run ...
3) If stock analysts rate a stock as "outperform" it just means that the CEO might be a nice bloke and that they don't understand rule 2)
4) Kiwi blokes are as capable as highly paid foreigners to run companies into the ground, and it is not more fun either (well, maybe for them);
5) Not sure what the RSNZ is doing to check insurance companies ... but whatever it is, it does not seem to work;
6) and ah, yes - ratings of credit rating agencies (a month ago still "A") have nothing to do with the financial situation of the rated company. The rating is just a nice (and expensive) letter. But hey, we knew that already since the GFC, didn't we?
7) If the directors of a company have lots of skin in the game it might just mean that they have been so far lucky (to make or inherit this money), not that they know what they are doing;

and - here is another one:
8) percy said he had a bad feeling about investing into insurance companies (talking about long tails) ... better listen to him next time

Phh - not normally that litigious, but I am wondering whether CBL board and management have been really that long that clueless. Due diligence? Continuous disclosure? I think it would be worthwhile for the SFO to look into this matter. Happy to fund as taxpayer some more prisons for a good cause.

To BP and all who invested in CBL, I only wish I had been proven wrong.

[King1212]

****..my new home under CBL insurance..luckily the home is 80% completed

[Hectorplains]

****..my new home under CBL insurance..luckily the home is 80% completed


What a mess. It's not going to change the situation for anyone who's been burnt but surely SFO has to investigate this ?! More questionables than quills on a porcupine.

[hardt]

I have not been learning much lately... this is a welcome experience that I am over the moon to be a part of.

I find solace in knowing brokers and seemingly bright institutions also took a punch to the throat on this one :t_up:

Can't wait to see the actual numbers of the.... very abrupt breakdown.
I am certain ( same way I was certain CBL was going great ) there are plenty of valuable bits within the group to limit complete loss of capital.

CBL are not being liquidated... yet.

Basically placing most of this weeks A2M profits into the dumpster fire with this one... celebrating with a bottle of 20yr tawny port and an early night :sleep:

BP's list basically says it all for me too.

[kiora]

Ouch didn't dodge that one,bugger sold the wrong shares ! Wonder how PT is going? Where are you PT?

[couta1]

Fark! How am i going to make up this loss, kind reminds me of climbing Mt Ngauruhoe, 2 steps up and 3 sliding down on the scree.:eek2: Apparently if your right 51% of the time, you are still in the money.

[carrom74]

Ouch didn't dodge that one,bugger sold the wrong shares ! Wonder how PT is going? Where are you PT?

PT was very bullish with CBL... hope he has sold them....seems unreal with so many going down like this... IQE,WYN and now CBL...

[King1212]

So what happen to it shares? People's money n possible thier retirement fund?...all gone?

seem unreal..as no big sign of financial difficulties...

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12000817

[Balance]

So what happen to it shares? People's money n possible thier retirement fund?...all gone?

seem unreal..as no big sign of financial difficulties...

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12000817

Like the collapsed finance companies, much will depend on what's recoverable - if any.

[NZSilver]

What's an absolute disaster! I nearly bought this but never pulled the trigger. From what I could tell it seemed to be a story of a well run and conservative NZ company. Well I dodged that bullet. I'm surprised at the number of companies who have failed lately on the NZX. Well here's hoping BIG on the ASX dosnt have the same fate as I did recently but a parcel. Real bumma

[pierre]

On the same day six months ago I purchased equal numbers of shares in CBL and another company. I had been following the second company for some time but was still wary about investing in it. So I decided to hedge my bets by buying some shares but also investing in what seemed to be a safe insurance company at the same time.

ATM has proved to be the better choice of the two.

Fortunately the paper gain on ATM at today's date has more than twice covered the almost certain total loss from CBL.

Apparently you can't win 'em all.

[Stranger_Danger]

I haven't followed this one closely, but there is clearly a lot more going on here than has been made public. I note this - http://www.bbc.com/news/business-43164788 - happened on the same day. Does anyone who knows CBL well know if there is any connection between the two firms?

[Joshuatree]

What's an absolute disaster! I nearly bought this but never pulled the trigger. From what I could tell it seemed to be a story of a well run and conservative NZ company. Well I dodged that bullet. I'm surprised at the number of companies who have failed lately on the NZX. Well here's hoping BIG on the ASX dosnt have the same fate as I did recently but a parcel. Real bumma

I bought a few BIG as well , heres hoping. Ive read there was no shorting on CBL so everyone holding has been caught out unfort.

[Leftfield]

I bought a few BIG as well , heres hoping. Ive read there was no shorting on CBL so everyone holding has been caught out unfort.

Sorry to hear the CBL news. This had been on my 'watch-list' but never held (same with BIG and my gutometer warns me that all is not right with BIG.)

Take care out here and good luck to holders.

[Ggcc]

Sad to hear for peoples loss on here. I went through it with Wynyard and it always sits in the back of your mind nowadays whether you make the appropriate choice when investing

[RupertBear]

Sad to hear for peoples loss on here. I went through it with Wynyard and it always sits in the back of your mind nowadays whether you make the appropriate choice when investing

Yep I went through it with Wynyard too so I feel for you guys caught holding CBL. It sux big time. :(

[winner69]

You guys enthusiasm for CBL piqued my interestv....mybe CBL is different from most insurance type companies.

Investment in insurors never really been my thing .... make money on the premiums sitting on the bank and hope you come out ahead on one's claims experience. And then accounts are basically a guess anyway (acturial assumptions and all that) so always hard to understand what the real picture is.

But I pressed on but after trying to uderstand this document CBL is not for me
https://stocknessmonster.com/announcements/cbl.nzx-311362/

I take it you guys have a decent feel for how things work ....good on you.

Obviously that presentation bamboozled a few smart fund managers with science because some topped up after this presentation in December

[minimoke]

Obviously that presentation bamboozled a few smart fund managers with science because some topped up after this presentation in DecemberI dont know what they are saying but it looks like they know what they are talking about. Now what time was morning tea?

[Lola]

I haven't followed this one closely, but there is clearly a lot more going on here than has been made public. I note this - http://www.bbc.com/news/business-43164788 - happened on the same day. Does anyone who knows CBL well know if there is any connection between the two firms?

Don’t believe so.
At least no mention of that company and writing business in China in the 60 page 2016 Offer Document
But this is such a Birds Nest who would really know?

[Balance]

https://www.nzx.com/announcements/299449

Guess there will be a few really pissed institutions who participated in the directors' $60m sell down less than a year ago?

https://www.nzx.com/announcements/290012

Then, there's those who participated in the $60m placement to strengthen the company's balance sheet etc etc in September 2016.

Appetite for CBL obviously was very very very good!

[trader_jackson]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12001665

Another day, another headline with CBL in it
for all the wrong reasons

[Brain]

Directors and management selling shares to increase liquidity for the benefit of all shareholders is such a noble thing to do. Shareholders should be so grateful for such a generous gesture from the likes of Harris Hutchinson and all.

[Leftfield]

It is always an education to read Warren Buffett's annual reports for Berkshire Hathaway.

This year's report (http://www.berkshirehathaway.com/letters/2017ltr.pdf) contains this gem which is likely to apply to CBL.

"As well-known analyst V.J. Dowling has pointed out, the loss reserves of an insurer are similar to a self-graded exam. Ignorance, wishful thinking or, occasionally, downright fraud can deliver inaccurate figures about an insurer’s financial condition for a very long time. "

[Lola]

https://www.nzx.com/announcements/299449

Guess there will be a few really pissed institutions who participated in the directors' $60m sell down less than a year ago?

https://www.nzx.com/announcements/290012

Then, there's those who participated in the $60m placement to strengthen the company's balance sheet etc etc in September 2016.

Appetite for CBL obviously was very very very good!

Hello Blance me old mate.

Agree with you yet again. But you could have included with the aggrieved institutions (fund managers), the Chairman, Sir John , who bought 25,000 shares in his company off the market in February 2017.

Begs the question I reckon: He must have been a willing buyer so now that this bird's nest has unfolded, to a degree, how much did he really know about how things operated?

This thing is shaping as a novel or a movie in that it fits the saying " truth is stranger than fiction".

BTW Mr Harris wasnt just Ernest and Young's Entreupreneur of the Year 2017, but he was also voted Young Entreprenuer of the Year back in 1989. Actually given this latest stuff one cant disagree with the accolades in a kind of warped sense.

[trader_jackson]

BTW Mr Harris wasnt just Ernest and Young's Entreupreneur of the Year 2017, but he was also voted Young Entreprenuer of the Year back in 1989. Actually given this latest stuff one cant disagree with the accolades in a kind of warped sense.

You reckon Harris will still represent New Zealand at EY's World Entrepreneur Of The Year event in Monaco this June?
(competing for the title with winners from more than 60 countries - something tells me he doesn't stand a very good chance)

[Balance]

Hello Blance me old mate.

Agree with you yet again. But you could have included with the aggrieved institutions (fund managers), the Chairman, Sir John , who bought 25,000 shares in his company off the market in February 2017.

Begs the question I reckon: He must have been a willing buyer so now that this bird's nest has unfolded, to a degree, how much did he really know about how things operated?



He added the 25,000 to the 600,000 shares he already owned.

Guess he had no idea that the French acquisition made in January 2017 was going to be the catalyst to CBL's misfortunes?

[Lola]

You reckon Harris will still represent New Zealand at EY's World Entrepreneur Of The Year event in Monaco this June?
(competing for the title with winners from more than 60 countries - something tells me he doesn't stand a very good chance)

Yep I reckon he will.
Unless he can’t travel for whatever reason.

[hardt]

CBL group will still be around in 2050... ( maybe under different ownership by then )

They tried to grow too fast and spread themselves too thin... I still don't believe this is going to end as poorly as people think.

Time will tell...

Name an insurance company that hasn't been overcooked before.

[Balance]

CBL group will still be around in 2050... ( maybe under different ownership by then )

They tried to grow too fast and spread themselves too thin... I still don't believe this is going to end as poorly as people think.

Time will tell...

Name an insurance company that hasn't been overcooked before.

Difference, Hardt, is that CBL Insurance (the mainstay of the group's business) is being LIQUIDATED.

[Brain]

The reserve bank used the term interim liquidation. Is there a difference between interim liquidation and liquidation? Has anybody got any ideas?

[Balance]

The reserve bank used the term interim liquidation. Is there a difference between interim liquidation and liquidation? Has anybody got any ideas?

Appointing an interim liquidator can preserve a company’s assets pending the court’s determination of whether the company should be placed into final liquidation. This prevents further deterioration of a company’s financial position thereby increasing the likelihood of successful debt recovery.

[stoploss]

The reserve bank used the term interim liquidation. Is there a difference between interim liquidation and liquidation? Has anybody got any ideas?
It’s a little bit like that first profit warning from FBU .... you know it’s going to get worse ....

[Brain]

Thanks Balance

[hardt]

Difference, Hardt, is that CBL Insurance (the mainstay of the group's business) is being LIQUIDATED.

As they are in breach of the minimum solvency requirement, RBNZ is coming after them and preventing any likelihood of damage to current policy holders.

They are not fundamentally over and there does remain an option to downsize back into a state the RBNZ will be comfortable with.

They have found themselves in a terrible position no doubt about that.

I have written off the investment completely and am trying to see what info I overlooked when I entered this one...
Say what you will about Mr Harris, but he is a bright cookie ( despite the mess his group is stuck in ) and no one should expect him to sit back as his life's work dies.
You can gather a lot about an executive with how they resolve situations just like this one... all eyes on Pete

[Balance]

Thanks Balance

bit more infor :

There are many reasons why it may be desirable to seek to have a company put into liquidation. The most common reason is that the company owes a client money. Another common reason is that the company has become unmanageable due to internal conflicts (particularly common with family owned companies). In cases such as this the client wishes for the company’s affairs to be wound up, and its assets realised and distributed by a liquidator.

Liquidation will enable a liquidator to realise the company’s assets and make a distribution to creditors including the client and, where the company is solvent, shareholders. The liquidator may also conduct an investigation into the company’s affairs. This can involve setting aside transactions under which the company has stripped itself of assets or seeking to recover funds from individual directors if the directors have breached their obligations to the company.

In order to address this problem it is possible to have an “interim liquidator” appointed to preserve the company’s assets pending the Court’s determination of whether or not to place the company into final liquidation.

Such applications are typically brought on an urgent basis and without notice to the company.

An interim liquidator does not have jurisdiction to realise the company’s assets and make distributions to creditors. Nor does an interim liquidator have the powers to make the sort of investigations and take the sort of recovery actions available to a final liquidator. Nonetheless, interim liquidators do have considerable powers they can use in order to preserve the company’s assets pending the final liquidation of the company, including, if necessary, assuming control of the operation of a company’s business.

[Balance]

As they are in breach of the minimum solvency requirement, RBNZ is coming after them and preventing any likelihood of damage to current policy holders.

They are not fundamentally over and there does remain an option to downsize back into a state the RBNZ will be comfortable with.

They have found themselves in a terrible position no doubt about that.

If only it was that - one suspects not as RBNZ would have been very aware of the implications of getting an liquidator appointed.

It is hell of a mess - and heck of a pity for NZ Inc. NZ could do with a successful and thriving global insurance company.

It is sobering to note that the company has extracted close to quarter of a billion dollars ($245m) from the market since its IPO less than 2 years ago - $155m as new capital and $90m to directors and management cashing out.

How did it get into such a mess so quickly?

[winner69]

Long list of companies in Voluntary Administration

Company instigated this lot ...probably to help untangle the web

https://www.nzx.com/announcements/314698

[Dust]

ouch....

some of the biggest players that got stung harbour 17mil, ACC 4 mil, NZSuper 8mil shares. Not sure why the PMs at these govt entities are getting paid tax payer salaries just so they can buy out every ticker on the exchange...wheres the value add in that.

Some notable target price valuations given recently lol

Forbarr - $3.6
Blue Ocean - $ 3.63
FNZC - $3.49
UBS $3.7

Also big shoutout to Deloitte! (What happens when you put hundreds of grads who lacks common sense on the job btw)

Expensive lesson for some of the holders on here, wishing you the best of luck hoping something good can still come out of this mess. An important reminder for the rest of us "If you dont understand what you're buying, best not at all".

[BlackPeter]

... An important reminder for the rest of us "If you dont understand what you're buying, best not at all".

Good advise, but I think misplaced here. This is unless you are saying that anybody buying any companies shares needs to personally check all due diligence the company ever has done (or was supposed to do) in order of "understanding what you are buying".

Nothing wrong with the insurance business unless there are "black swan" events (and so far I don't see that in this case) or unless whoever is responsible for running the company don't know how to calculate their risks. Latter points to lack of management / board competence, which is hard for any shareholder to measure (particularly if the company was for more than 40 years lucky and has sound financial ratings and analyst assessments). You only notice lacking competence in running a business when it is too late.

[winner69]

Dust says "If you dont understand what you're buying, best not at all".

In CBL’s case surely reading the CBL presentation of early December with all the technical notes in it I would hazard a guess nobody on this forum would have understood what they really do ..except in vague terms.

And I did comment at the time only a few in the company probably did ...in hindsight maybe even they didn’t

[Dust]

Yes I agree BP, not saying there was anything wrong with investing in sound financial companies in general.

Speaking more from a personal experience, when CBL first got on my radar, I didn't even get as far as looking at their financials yet before every gut instinct started telling me to run in the opposite direction. Writing foreign business was a big turn off at first (not that theres anyting wrong with this, just I'm no expert in european insurance regulations)...then a quick trip to their website kind of sealed the deal, there are no legitimate businesses in 2018 running scuffed sites looking like that I can tell you. I've seen cryto ponzi sites whose made more effort in their presentation!

[BlackPeter]

Yes I agree BP, not saying there was anything wrong with investing in sound financial companies in general.

Speaking more from a personal experience, when CBL first got on my radar, I didn't even get as far as looking at their financials yet before every gut instinct started telling me to run in the opposite direction. Writing foreign business was a big turn off at first (not that theres anyting wrong with this, just I'm no expert in european insurance regulations)...then a quick trip to their website kind of sealed the deal, there are no legitimate businesses in 2018 running scuffed sites looking like that I can tell you. I've seen cryto ponzi sites whose made more effort in their presentation!

Fair enough ... and yes, I do remember winner commenting on the presentation.

I think what I would take out of both of these issues is that they either didn't bother to present to the respective audience or had pretty bad presenting skills (or both). I guess we will (hopefully) still learn whether their bad presentation skills resulted in the disappearance of hundreds of millions of dollars (and who knows - maybe the liquidator finds some of them (just being optimistic ;));

I still feel that it is more likely the recent events point either to board incompetence (lack of due diligence?) or to more sinister reasons - and these are both things which unfortunately can happen in any industry with or without presentation skills.

I do agree however, that their collection of (rather unrelated) niche markets around the world might be as well a sign for something, but again - I don't think this was the cause for the current situation.

If we assume (we don't know, but this is the only hint we have) that the current malaise is based on them miscalculating the long tail for the French construction industry, than neither a more glossy and readable presentation nor a better designed web page for the parent holding would have stopped what happened.

[winner69]

Their presentation skills must be pretty good as they have raised millions

That December presentation must have been really well presented ....seemed to get a few funds to add to their holdings

[winner69]

CBL another case of where Underlying Profit is highlighted and relied upon too much to assess the future

[whatsup]

CBL another case of where Underlying Profit is highlighted and relied upon too much to assess the future

reminds me of PEB hype

[hardt]

reminds me of PEB hype

There is a big difference between PEB's channel stuffing ( booked revenues moving into receivables into doubtful debts into write downs ) and CBL's actuaries stuffing up risk assumptions and solvency ratios collapsing and big fat reserve strengthening to make up for it.

Also CBL had around $60m in net operating Cashflow 1H17... ( and about 70m spent on garbage acquisitions... )
One thing they both have in common is the funds seem to love em.

Looks like PEB has the better chance to succeed out of the two now.

[trader_jackson]

Looks like PEB has the better chance to succeed out of the two now.

Certainly looks like it... Who would have thought that 6 months ago? (or even a month ago)

[Balance]

Certainly looks like it... Who would have thought that 6 months ago? (or even a month ago)

I would say that PEB has raised the last of its capital. Harbour Asset fund managers are going to have to answer some really hard questions why their strategy of underwriting capital raisings/placements (nice fees, see?), supporting the share price post the capital raise (performance, see?) and building up an ever greater shareholding (more influence, see?) has blown up so spectacularly - $50m hit.

Cannot see their fund 'guardians' allowing any increased exposure to PEB - so PEB better perform!

[rayonline]

I don't have any of this but trading is suspended. So what happens? Can this be suspended for indefinitely and investors are unsecured creditors?

[Balance]

I don't have any of this but trading is suspended. So what happens? Can this be suspended for indefinitely and investors are unsecured creditors?

Like Pike River, CBL can be suspended indefinitely - it is now in the laps of the interim liquidators and 'voluntary administrators'.

[Oliver Mander]

It is sobering to note that the company has extracted close to quarter of a billion dollars ($245m) from the market since its IPO less than 2 years ago - $155m as new capital and $90m to directors and management cashing out.

Isn't that the same number ($245m) that was raised in the Feltex IPO...?
Hmmm...is this NZX's unluckiest number?

Disc: not a holder, but an interested observer.

[Balance]

Isn't that the same number ($245m) that was raised in the Feltex IPO...?
Hmmm...is this NZX's unluckiest number?

Disc: not a holder, but an interested observer.

And similar to Pike River.

[Oliver Mander]

And similar to Pike River.

Indeed...how curious!
"A series of capital raisings, including a float on the New Zealand and Australian stock exchanges in July 2007, raised the $246 million capital to develop the resource".

Actually, the source for this quote is quite interesting...a construction company talking about the "award winning access tunnel". Hmmmm...
https://www.tunneltalk.com/MacDow-Feb09-Award-winner-at-Pike-River.php

And now, back on topic....

[Balance]

https://www.stuff.co.nz/business/money/101776403/thousands-of-recentlybuilt-homes-covered-by-guarantees-from-cbl-insurance

The long tail liabilities that Percy alerted to.

[hardt]

Results out tomorrow... let us see some numbers for eff sake

[winner69]

Results out tomorrow... let us see some numbers for eff sake

Normalised NPAT about $49m .... that's if they bother to make an announcement (i reckon unlikely)

[Balance]

So how does this gel with the interim liquidator appointment in NZ?

Irish Central Bank moves to prevent 'disorderly failure' of CBL Insurance Europe

Reuters Staff


DUBLIN, Feb 26 (Reuters) - An Irish court has appointed an administrator to CBL Insurance Europe (CBLIE), a wholly owned subsidiary of New Zealand’s CBL Corp Ltd, to avoid the risk of a “disorderly failure”, the Irish Central Bank announced on Monday.

The Irish Central Bank last week ordered CBLIE to cease writing new business with immediate effect and on Monday said that it was in a distressed financial position and had failed to address issues brought up by the bank in recent months.

CBL Insurance Europe, which underwrites construction-related insurance, is registered in Ireland and authorised to write business in Ireland and on a freedom of services basis in Belgium, Denmark, France, Italy, Norway, Romania, Spain, Sweden and Britain. (Reporting by Conor Humphries, editing by Louise Heavens)

Some good news for those who bought insurance off CBL in Europe though :

https://www.insurancetimes.co.uk/zurich-to-cover-8000-policies-as-cbl-corp-goes-into-voluntary-administration-/1426472.article

[Balance]

Keep an eye on this - looking unlikely that there's any gold left in the muck but who knows?

CBL really needs a proper 'good bank bad bank' restructure if there are any good bits indeed which could be recapitalised.

https://www.fool.com.au/2018/02/26/why-cbl-corporation-just-entered-voluntary-administration-liquidators-appointed/

Grim reading.

[Scrunch]

Assuming they report their result, shouldn't there be the option of trading again, even if the buyers are speculators at penny prices. Or do nzx want to avoid trading so that the last traded price remains over $3 and there is no negative hit on indexes?

[minimoke]

Keep an eye on this - looking unlikely that there's any gold left in the muck but who knows?

CBL really needs a proper 'good bank bad bank' restructure if there are any good bits indeed which could be recapitalised.

https://www.fool.com.au/2018/02/26/why-cbl-corporation-just-entered-voluntary-administration-liquidators-appointed/

Grim reading.
Interesting that a company can be in discussions with a third party (RBNZ since july 2017) and on the grounds of commercial sensitivity not keep the market informed.

[hardt]

Assuming they report their result, shouldn't there be the option of trading again, even if the buyers are speculators at penny prices. Or do nzx want to avoid trading so that the last traded price remains over $3 and there is no negative hit on indexes?

Trading should be suspended through the entire process...

Whether they find capital to plug the hole, sell down the business into something manageable or liquidated entirely...

[hardt]

Interesting that a company can be in discussions with a third party (RBNZ since july 2017) and on the grounds of commercial sensitivity not keep the market informed.

Exactly, that is what irked me about this whole thing... here the market is thinking this thing is chugging along well enough, pretty presentations and tooting about all the big growth opportunities...

For almost 8 months things have been fundamentally wrong, but in no way reflected to the market.

EDIT: first lot of reserve strengthening should have been a red flag

[winner69]

Nice term that ‘disorderly failure’

[Arbroath]

https://www.nbr.co.nz/article/cbl-ireland-distressed-financial-position-th-213132

No results to be released as it sounds like its totally stuffed.

Disc: not a holder but feel sorry for those that are. I hope the Directors/MD are charged if there is evidence of gross negligence or fraud.

[Grunter]

CBL is now an absolute sitter for a securities class action - will it happen though, probably not as NZ investors never want to do anything about it.

A major issue rearing it's head - CBL underwrites a large number of contractors bonds and building warranty products in the NZ market. Now those bonds and warranties are effectively useless.

Will this trigger a call on those bonds where contractors have to front up with cash to replace the bond? Cash that the contractors very likely do not have? Will this impact the construction sector?

And how about those home owners that have bought a new house with a now useless building warranty guarantee?

[stoploss]

CBL is now an absolute sitter for a securities class action - will it happen though, probably not as NZ investors never want to do anything about it.

A major issue rearing it's head - CBL underwrites a large number of contractors bonds and building warranty products in the NZ market. Now those bonds and warranties are effectively useless.

Will this trigger a call on those bonds where contractors have to front up with cash to replace the bond? Cash that the contractors very likely do not have? Will this impact the construction sector?

And how about those home owners that have bought a new house with a now useless building warranty guarantee?

Was anyone ever charged over the AMI debacle , surely insuring roughly 50 % of all the houses in CHCH was not a good spread of risk hence the failure ?

[Balance]

Was anyone ever charged over the AMI debacle , surely insuring roughly 50 % of all the houses in CHCH was not a good spread of risk hence the failure ?

There have been no charges filed against anyone in respect of the 115 deaths due to negligence and incompetence over the CTV collapse from the Christchurch earthquake.

Why would anyone be charged over a 'trifle' matter like incompetence in managing AMI's overexposure to Christchurch?

[Balance]

https://www.interest.co.nz/opinion/92333/david-hargreaves-says-cbl-saga-raises-questions-about-rbnzs-handling-its-insurance

Article with some very damning insights into the workings of CBL, NZX and RBNZ.

Best part is the RBNZ's interactions with CBL since July 2017 and directions issued to CBL to fix its financial position.

CBL claims confidentiality, RBNZ will not deny or confirm and the NZX is blissfully unaware of anything going on.

Silence from the NZX re CBL is deafening.

Anyone who is a shareholder in CBL better wake up to the reality that NZX rules and regulations are a sham - there is no enforcement.

[Balance]

https://www.interest.co.nz/insurance/92352/central-bank-ireland-warns-there-could-be-disorderly-failure-cbl-insurance-europe-if

Confirmation by another publication that CBL will not be announcing its results toady - advised to NZX but NZX has chosen not to advise the market!

Guess NZX must be pink with embarrassment at how another Feltex, courtesy of Forsyth Barr and UBS, has revisited its listing board?

[Balance]

Anyone observing the share price of CBL will note how its share price started dropping away from end of July 2017.

Coincidental that RBNZ started its 'interactions' into the company's capital adequacy and claims provisioning at that time?

FMA and NZX are asleep at the wheels again or have they finally woken up to actually do some investigation?

[Xerof]

Friends of directors, staff.....pass the word around, ....sell.

Sounds like SCF all over again, with the public service and hangers-on, thinking they can fix it without 'worrying' the community.

[winner69]

If CBL don’t file their report by March 31st the NZX will suspend trading in their shares

That George Kerr of PGC knows all about this

Balance, What’s George up to these days?

[Joshuatree]

Just the one sell down, in april 2017 when MD and chairman sold a combined 10.4 mill shares , 4 % of the company to increase "liquidity" and repeating how healthy the company is. And FNZ increased holding from 5% to 6% plus in Jan 2018, they will be spewing along with the rest of us.:eek2:

[Baa_Baa]

Anyone observing the share price of CBL will note how its share price started dropping away from end of July 2017.

Well spotted, and the daily SP drop in early August was a gap-down, quite precipitous on the day at the time, which indicates some were 'in the know', then 6-7 weeks of further downside .. ergo the selling continued. It wouldn't be obvious anything was particularly wrong to uninformed shareholders, possibly a conundrum as to why the SP weakness? Despicable, with hindsight considering the timings referred to re RBNZ awareness etc.

What a shambles. This stuff rocks ones confidence in the NZX as a platform for transparent markets.

[peat]

I took a squiz through the last six months and sure its easy with hindsight but there were a few clues for people.
The first one really was that interim profit with the large increase in reserves.
Then later the CFO resigned.
Then there was some more announcements about reserves.
These were all ominous

Also I remember someone whose opinion I valued saying to me something very dubious about this company after those first reserve adjustments. Along the lines of un-quantifiable risk.
That Christmas presentation was a real doozy too huh. Made me feel a bit thick tbh, when I read that.

Guess I am - thick enough to have considered this company but not thick enough to invest.

[Beagle]

I took a squiz through the last six months and sure its easy with hindsight but there were a few clues for people.
The first one really was that interim profit with the large increase in reserves.
Then later the CFO resigned.
Then there was some more announcements about reserves.
These were all ominous

Also I remember someone whose opinion I valued saying to me something very dubious about this company after those first reserve adjustments. Along the lines of un-quantifiable risk.
That Christmas presentation was a real doozy too huh. Made me feel a bit thick tbh, when I read that.

Guess I am - thick enough to have considered this company but not thick enough to invest.

Hindsight its always easy. I'm not an investor so my interest is purely academic but there's no real clear TA signal that good TA skills would have got you out, that's scary.
Further, nothing unusual about reserve adjustments with insurance companies so I doubt your first point would have raised too much concern.
Secondly CFO's resign from time to time for personal and career advancements or retirement so its not all that often I see that as a point of concern e.g. Rob McDonald resigning as CFO of AIR and me selling my shares in AIR late last year are pure coincidence, I don't think the new guy has such a great personality on the conference call but it certainly hasn't put me off.
The further announcement about reserves came in February right ? or perhaps I haven't looked at the timeline carefully enough ? Much time to consider one's options then was there ?
This will have come as a major shock to seasoned and well respected fund managers like well respected Harbour Asset management who at least in theory as a major shareholder have access to bending the managers and directors ears other that at annual meetings so if they got it wrong I think your average Joe Bloggs who also got it wrong can forgive themselves for not being perfect ?
I think the few clues that were there were pretty faint and far between. RBNZ's actions in keeping their long standing enquiries confidential is surely the matter that's the bone of contention to chew on ?

[Lola]

I took a squiz through the last six months and sure its easy with hindsight but there were a few clues for people.
The first one really was that interim profit with the large increase in reserves.
Then later the CFO resigned.
Then there was some more announcements about reserves.
These were all ominous

Also I remember someone whose opinion I valued saying to me something very dubious about this company after those first reserve adjustments. Along the lines of un-quantifiable risk.
That Christmas presentation was a real doozy too huh. Made me feel a bit thick tbh, when I read that.

Guess I am - thick enough to have considered this company but not thick enough to invest.

There was another big clue.Namely
The sell down by Harris and Hutchinson (discharged bankrupt) in April 017 virtually moments after their shares came out of escrow. The lame reason given at the time viz : “ to increase liquidity “ was actually crap because the buyers were only a few.

This whole mess will keep a lot of lawyers buzzing with excitement as they contemplate the potential for fame and fees. Interns line up!

[winner69]

I do feel (a bit) for Carden the CFO. He resigned in November and gave 6 months notice and is still in the office. No doubt he has working through all this **** of late and still puts his name to most announcements

CBL Managing Director, Peter Harris said, "On behalf of CBL I would like to thank Carden for his significant commitment and contribution to CBL over the last 10 years. He is leaving on good terms and not planning to take up another position, and his last day will be 30th April 2018."

Been around long enough .... maybe he did see the writing on the wall ...but thats just pure speculation

[Brain]

If the CFO couldn’t see the writing on the wall then nobody outside the company could possibly be expected to see it.

[peat]

Hindsight its always easy.
Yeh absolutely. Not suggesting otherwise but its still educational

Weird thing is I havent even looked at the chart until you mentioned it Beagle.
But of course there was a huge warning. That precipitous fall of a whole dollar (nearly 25%) in the space of six weeks last August. And the recovery from that never even reached 50%.

At least I hope this company gave off enough bad vibes that anyone who had it didnt jump in too hard.

[minimoke]

I do feel (a bit) for Carden the CFO. He resigned in November and gave 6 months notice and is still in the office. No doubt he has working through all this **** of late and still puts his name to most announcements

CBL Managing Director, Peter Harris said, "On behalf of CBL I would like to thank Carden for his significant commitment and contribution to CBL over the last 10 years. He is leaving on good terms and not planning to take up another position, and his last day will be 30th April 2018."

Been around long enough .... maybe he did see the writing on the wall ...but thats just pure speculationMaybe he was locked into a deal to keep him inside the tent for as long as possible

[Balance]

I do feel (a bit) for Carden the CFO. He resigned in November and gave 6 months notice and is still in the office. No doubt he has working through all this **** of late and still puts his name to most announcements

CBL Managing Director, Peter Harris said, "On behalf of CBL I would like to thank Carden for his significant commitment and contribution to CBL over the last 10 years. He is leaving on good terms and not planning to take up another position, and his last day will be 30th April 2018."

Been around long enough .... maybe he did see the writing on the wall ...but thats just pure speculation

https://stocknessmonster.com/announcements/cbl.asx-2A1064940/

She saw the writing on the wall, in neon lights surrounded by glitter?

[Balance]

https://www.interest.co.nz/news/59694/fast-growing-nz-insurer-cbl-insurance-shrugs-two-notch-sp-downgrade-bb-after-striking

Was the writing on the wall 6 years ago?????

Excerpt :

"S&P has cut CBL to BB- with a negative outlook from BB+. S&P also said CBL, which is licenced under the new Reserve Bank prudential regulation regime for insurers and was formerly known as Contractors Bonding Ltd, has governance that's "less than adequate" with its board lacking independence from management."

"CBL now has reduced tolerance and ability to absorb shocks because of its weak risk based capitalisation, financial leverage, modest financial flexibility from entrepreneurial ownership, as well as concentration and credit quality risk regarding its investment assets," S&P said."

Looks like CBL switched its ratings agency to A.M Best in 2013.

[Hectorplains]

There was another big clue.Namely
The sell down by Harris and Hutchinson (discharged bankrupt) in April 017 virtually moments after their shares came out of escrow. The lame reason given at the time viz : “ to increase liquidity “ was actually crap because the buyers were only a few.

This whole mess will keep a lot of lawyers buzzing with excitement as they contemplate the potential for fame and fees. Interns line up!

It's poor chemistry too; "Increasing liquidity" = taking the p*&%.

[King1212]

"All policies currently in force will remain in place and should policyholders have a claim under their policies, it will be processed by CBLI in the ordinary course of business. However, it should be noted that the timing and quantum of payment under any policy a claim may be made under is uncertain at this time and as stated above, no claims can be paid while the company remains in interim liquidation."

that is what the email sent to me today. Basically my 10 years new built warranty is gone...!

[freddagg]

https://www.interest.co.nz/news/59694/fast-growing-nz-insurer-cbl-insurance-shrugs-two-notch-sp-downgrade-bb-after-striking

Was the writing on the wall 6 years ago?????

Excerpt :

"S&P has cut CBL to BB- with a negative outlook from BB+. S&P also said CBL, which is licenced under the new Reserve Bank prudential regulation regime for insurers and was formerly known as Contractors Bonding Ltd, has governance that's "less than adequate" with its board lacking independence from management."

"CBL now has reduced tolerance and ability to absorb shocks because of its weak risk based capitalisation, financial leverage, modest financial flexibility from entrepreneurial ownership, as well as concentration and credit quality risk regarding its investment assets," S&P said."

Looks like CBL switched its ratings agency to A.M Best in 2013.

Thanks for finding that Balance. How many shareholders would have invested in CBL if they had read that report.
I have never taken much notice of of ratings agency reports but I will from now on.

[Balance]

Thanks for finding that Balance. How many shareholders would have invested in CBL if they had read that report.
I have never taken much notice of of ratings agency reports but I will from now on.

One assumes that the underwriters and promoters (UBS, Forsyth Barr, institutions) would have as part of their due diligence assessed the ratings report.

[Sideshow Bob]

One assumes that the underwriters and promoters (UBS, Forsyth Barr, institutions) would have as part of their due diligence assessed the ratings report.

As they say Balance, "Assumption is the mother of all F***-Ups".

[Balance]

As they say Balance, "Assumption is the mother of all F***-Ups".

Guess Harbour, ACC and FNZ Capital (being shareholders) must have assumed proper due diligence was done - oops!

[Lola]

Thanks for finding that Balance. How many shareholders would have invested in CBL if they had read that report.
I have never taken much notice of of ratings agency reports but I will from now on.

Treat them all with a grain of salt.
Including self appointed ones from Kapiti coast
DYOR

[trader_jackson]

Looks like the Preliminary Unaudited Normalized Underlying Adjusted Profit won't be announced

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CBL/314890/275458.pdf

Are they still getting ready for a cap raise or is the game already over...

[Dust]

Guess Harbour, ACC and FNZ Capital (being shareholders) must have assumed proper due diligence was done - oops!

Reasonable to say the average investor wouldn't possess the ability to conduct proper DD on this dud, but Harbour and their team of talent, 5 something CFA charterholders dropping the ball on this just makes me chuckle :D I guess the old boys club are just dart board picking stocks these days too

[leesal]

Looks like the Preliminary Unaudited Normalized Underlying Adjusted Profit won't be announced

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/CBL/314890/275458.pdf

Are they still getting ready for a cap raise or is the game already over...

Its well and truely done.

They mispredicted long-tail claims in a segment that was over 50% of their business. Not sure what the numbers are, but to mock an example if CBL generated 1 billion of revenue on 10 year warranty, they'd get acturial estimates for expected claims, at say 50m against 100m of recognised revenue, and deduct 20m admin to arrive at 30m profit. Actuarially they require a buffer for adverse claims, eg an additional 50m pa... Thus must maintain liquidity of approx 1b, reinsure a portion of the exposure, and hold the rest in the balance sheet.

Instead claims turn out to be 75m, and reserve provisioning requires the keep capital to cover up to 125m pa. So now have a 250m exposure, less the reinsurance. Which is fine, the business still generates a profit (50m over 10 years), and generates interest from funds held in trust... They just need additional reserves to fill the funding gap.

However, this is the story CBL have released, which given their track record with RBNZ we should ascribe very little confidence... 3rd party investor comes in, and judges that claims in the french construction segment are trending and will blow out. Project 95m pa over the next 10 years, leading to a operating loss of 15m over the next 10 years, and requiring an additional 200m of reserves.

So they need to book in a net loss of 150m , and raise an additional 300m+ in this example.

Thats where we were on the 8th... Now we are in liquidation mode, a sizeable discount to fair value on the assets of the business, so any "shareholder value" is eroded. That plus the fees of liquidators, lawyers, every single creditor jumping down the throat, not to mention the run on claims (the house you thought might be leaky but holds a 10 year CBL warranty, all of a sudden is definately leaky).

Credit downgrade from BBB(whatever it was) to E says it all. Its junk, and thats the Debt, equity sits down the pecking-order. At this stage its just a question of whether policy-holders funds are adequately ringfenced.

[Balance]

Good explanation, leesal.

Not hard to understand when you explain it so well.

[Balance]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12003448

What an absolute disgrace and abdication of responsibility and accountability to insurance policy holders!

Surely CBL can assess and contact their policy holders if they are still ok or need to get additional cover!

NZX, FMA, RBNZ and of course, CBL directors & management - DO YOUR FREAKING JOB!

[winner69]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12003448

What an absolute disgrace and abdication of responsibility and accountability to insurance policy holders!

Surely CBL can assess and contact their policy holders if they are still ok or need to get additional cover!

NZX, FMA, RBNZ and of course, CBL directors & management - DO YOUR FREAKING JOB!

No doubt Jacinda will ride in and save the day for home owners with these guarantees / bonds

And the culprits will live to fight another day (which is very wrong)

Isn’t that what moral hazard is all about

[whatsup]

No doubt Jacinda will ride in and save the day for home owners with these guarantees / bonds

And the culprits will live to fight another day (which is very wrong)

Isn’t that what moral hazard is all about

winner, was that a intended pun, Jac----, ( the horse ) riding in to save home owners ?

[hardt]

12/06/17 - Credit Rating A- Excellent

The ratings reflect CBL’s strong risk-adjusted capitalisation, consistently profitable operating performance and low product risk profile and CBL maintaining a strong risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). This is reflective mainly of its moderate underwriting leverage and favourable liquidity position. In addition, with a conservative gross leverage ratio, the company is not considered to be highly dependent on reinsurance.”

ha...ha...

[Beagle]

https://www.nbr.co.nz/article/cbl-insurance-paid-55m-overseas-breach-rbnz-orders-th-213285

You would think that the Directors must personally be "in the line of gunfire" from creditors for breaching a direct order by RBNZ.

[Balance]

https://www.nbr.co.nz/article/cbl-insurance-paid-55m-overseas-breach-rbnz-orders-th-213285

You would think that the Directors must personally be "in the line of gunfire" from creditors for breaching a direct order by RBNZ.

All their assets are safely tucked away in trusts.

Criminal prosecution should be taken to make sure they pay something for tipping this company into liquidation.

[minimoke]

https://www.nbr.co.nz/article/cbl-insurance-paid-55m-overseas-breach-rbnz-orders-th-213285

You would think that the Directors must personally be "in the line of gunfire" from creditors for breaching a direct order by RBNZ.
"CBL Insurance had recently confirmed to the Reserve Bank that it was continuing to operate despite being below the minimum regulatory solvency level." Isn't this the kind of information that ought to be released to the market at the time?

[Balance]

"CBL Insurance had recently confirmed to the Reserve Bank that it was continuing to operate despite being below the minimum regulatory solvency level." Isn't this the kind of information that ought to be released to the market at the time?

Shows the contempt that the directors of CBL have for RBNZ? They pay a huge price for the contempt.

Probably thought they were dealing with the NZX - in which case the directors and management of the NZX would spend the next 6 months investigating while pissing in their pants as they face a QC from CBL.

[Beagle]

All their assets are safely tucked away in trusts.

Criminal prosecution should be taken to make sure they pay something for tipping this company into liquidation.


"CBL Insurance had recently confirmed to the Reserve Bank that it was continuing to operate despite being below the minimum regulatory solvency level." Isn't this the kind of information that ought to be released to the market at the time?

Yes and Yes. One would hope that criminal prosecution will be pending especially in light of this http://www.sharechat.co.nz/article/2d42b6d2/rbnz-sought-interim-liquidation-after-cbl-insurance-breached-orders-paid-55m-offshore.html?utm_medium=email&utm_campaign=RBNZ%20sought%20interim%20liquidation %20after%20CBL%20Insurance%20breached%20orders%20p aid%2055M%20offshore&utm_content=RBNZ%20sought%20interim%20liquidation% 20after%20CBL%20Insurance%20breached%20orders%20pa id%2055M%20offshore+CID_e3faf31223382d46da559e0ad2 91c933&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle2d42b6d2rbnz-sought-interim-liquidation-after-cbl-insurance-breached-orders-paid-55m-offshorehtml

[Sideshow Bob]

https://www.stuff.co.nz/business/101891157/reserve-bank-says-cbl-paid-out-55-million-despite-doubts-about-solvency

[blackcap]

https://www.stuff.co.nz/business/101891157/reserve-bank-says-cbl-paid-out-55-million-despite-doubts-about-solvency

If they paid out the money whilst being insolvent.... directors are liable.

52 Board may authorise distributions
(1)
The board of a company that is satisfied on reasonable grounds that the company will, immediately after the distribution, satisfy the solvency test may, subject to section 53 and the constitution of the company, authorise a distribution by the company at a time, and of an amount, and to any shareholders it thinks fit.
(2)The directors who vote in favour of a distribution must sign a certificate stating that, in their opinion, the company will, immediately after the distribution, satisfy the solvency test and the grounds for that opinion.
(5)Every director who fails to comply with subsection (2) commits an offence and is liable on conviction to the penalty set out in section 373(1).

But the penalties are pitiful

Penalty for failure to comply with Act
(1)
A person convicted of an offence against any of the following sections of this Act is liable to a fine not exceeding $5,000:

[Valuegrowth]

Even Insurance stocks are not safe. There are some risks in the insurance sector as well. In the long run only strong balance sheets firms will have sustainable business.

https://www.investopedia.com/ask/answers/071615/what-risks-do-i-face-when-investing-insurance-sector.asp

[winner69]

Harbour Asset Management ‘valuing’ CBL at 88 cents for the purpose of valuing their funds.

[Brain]

Harbour Asset Management ‘valuing’ CBL at 88 cents for the purpose of valuing their funds.

Every other punter that reads this thread and the business news has already and quite rightly written off the value of the CBL shares. This Says a lot about Harbour.

[winner69]

Every other punter that reads this thread and the business news has already and quite rightly written off the value of the CBL shares. This Says a lot about Harbour.

There rationale
https://www.harbourasset.co.nz/wp-content/uploads/2018/02/Harbour-Navigator-Equity-Update-1-March.pdf

[Brain]

There rationale
https://www.harbourasset.co.nz/wp-content/uploads/2018/02/Harbour-Navigator-Equity-Update-1-March.pdf

two words come to mind

a) blinkered
b) dishonest

[Balance]

Harbour Asset Management ‘valuing’ CBL at 88 cents for the purpose of valuing their funds.

Wonder if they will be willing to buy shares off other shareholders at a generous 50% discount - say, 44 cents?

Betcha they will offer all kind of 'rationales' why they will not - overweight, against exposure limites, rhubarb, rhubarb, hot kumara etc.

[Balance]

Every other punter that reads this thread and the business news has already and quite rightly written off the value of the CBL shares. This Says a lot about Harbour.

And they still have PEB - same deal, invest, underwrite, buy more to support the sp etc etc.