CBL Insurance IPO

[Lola]

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

Harbours shareholders include FNZ I’m pretty sure. They clipped a few nice tickets on CBL crossings.
It will be very interesting to have Mr CJLees take on all this as in his view often published FNZ are the bestest in the industry ever, other than his own of course.

[blackcap]

It will be very interesting to have Mr CJLees take on all this as in his view often published FNZ are the bestest in the industry ever, other than his own of course.
That wouldn't have anything to do with his boy would it? :)

[Lola]

That wouldn't have anything to do with his boy would it? :)

Hadn’t thought of that.

[leesal]

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:

They could potentially be up for wreckless trading which carries a fine of up to $10,000 :)

Every announcement is getting worse and worse, and shows a complete lack of integrity of the members of the board. From allowing their mates to sell down a year back on the quiet, dropping policy holders in the deep end by not adequately providing for claims capital (including lack of reinsurance arrangements), to quickly dispatching funds to their favoured creditor (or should this read rathole).

NZX and RBNZ have a lot to answer for, to permit this lack of transperancy.

Disclosure - I bought a small holding in 2016 after attending a Northern Club event - an evening with Peter Harris. Now stands as my most expensive dinner invitation.

[Marilyn Munroe]

Disclosure - I bought a small holding in 2016 after attending a Northern Club event - an evening with Peter Harris. Now stands as my most expensive dinner invitation.

https://www.fbi.gov/news/stories/beware-of-affinity-fraud

Boop boop de do
Marilyn

[Balance]

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

Reading through the update, I must be missing or misreading something :

"The investment in CBL has been a relatively small part of our equity funds (not in the top 10 holdings)."

https://www.nzx.com/announcements/312804

According to the last SPH, Harbour owned 16.966m shares in CBL.

Using sp of $3.04 as at 31 Dec 2017, valuation = $51.58m

Their Australasian Equity Fund had $230m, NZ Equity Fund had $140m and other equity related funds (Income & Beta) ahd $110m = $480m in total.

$51.58m on $480m > 10%

Something smells.

[minimoke]

There rationale
https://www.harbourasset.co.nz/wp-content/uploads/2018/02/Harbour-Navigator-Equity-Update-1-March.pdfGood to see they avoid Sky TV. And people pay for this funds management!

[minimoke]

Reading through the update, I must be missing or misreading something :

"The investment in CBL has been a relatively small part of our equity funds (not in the top 10 holdings)."

https://www.nzx.com/announcements/312804

According to the last SPH, Harbour owned 16.966m shares in CBL.

Using sp of $3.04 as at 31 Dec 2017, valuation = $51.58m

Their Australasian Equity Fund had $230m, NZ Equity Fund had $140m and other equity related funds (Income & Beta) ahd $110m = $480m in total.

$51.58m on $480m > 10%

Something smells.
What happens if you use $0.88 as the SP, or even $0.00?

[D. Fender]

Reading through the update, I must be missing or misreading something :

"The investment in CBL has been a relatively small part of our equity funds (not in the top 10 holdings)."

https://www.nzx.com/announcements/312804

According to the last SPH, Harbour owned 16.966m shares in CBL.

Using sp of $3.04 as at 31 Dec 2017, valuation = $51.58m

Their Australasian Equity Fund had $230m, NZ Equity Fund had $140m and other equity related funds (Income & Beta) ahd $110m = $480m in total.

$51.58m on $480m > 10%

Something smells.

I think Harbour actually manages well over $2bn - the retail funds are not the whole story, they manage lots of wholesale money too. But the update they gave is a little vague. Why not just tell clients exactly what percentage of each fund CBL is/was? Of more concern is the fact that they are obviously letting investors buy and sell units in the funds based on their 'estimated' price of 88 cents for CBL. If CBL's equity turns out to be worthless, then investors buying into Harbour's funds are paying too much for each unit. Investors selling units are also receiving too much, to the detriment of investors staying in the fund.

[BlackPeter]

Reading through the update, I must be missing or misreading something :

"The investment in CBL has been a relatively small part of our equity funds (not in the top 10 holdings)."

https://www.nzx.com/announcements/312804

According to the last SPH, Harbour owned 16.966m shares in CBL.

Using sp of $3.04 as at 31 Dec 2017, valuation = $51.58m

Their Australasian Equity Fund had $230m, NZ Equity Fund had $140m and other equity related funds (Income & Beta) ahd $110m = $480m in total.

$51.58m on $480m > 10%

Something smells.

They probably applied already the new valuation ;)

[RGR367]

What happens if you use $0.88 as the SP, or even $0.00?

@0.00? :cool: Becoming like unwanted cryto coin, you mean.

[JoeM]

Does anyone know what they are valuing CBL in the FNZ NZ top 50 tracker fund? I note they have put the below comment in.

*Please note due to extended suspension of CBL trading, Smartshares have used an independent valuation of the CBL holding in this fund in accordance with the governing documents of the scheme.

[bull....]

its called smoothing the returns , write off the rest over time

[minimoke]

@0.00? :cool: Becoming like unwanted cryto coin, you mean.I thought it went without saying that had CBL utilised blockchain technology they would not be in the position they are in today.

[stoploss]

Just wondering did CBL provide building insurance in NZ as well ?
Looks like a train wreck in many ways ....this will only compound it if so ..

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12002092

[minimoke]

Just wondering did CBL provide building insurance in NZ as well ?
Looks like a train wreck in many ways ....this will only compound it if so ..

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12002092
This whole industry looks like a trainwreck . In "booming" times Stonewodd, FBU, A1, CBL etc all cant make money. Maybe the only winners are CMO with sales of new Ford Rangers

[blackcap]

This whole industry looks like a trainwreck . In "booming" times Stonewodd, FBU, A1, CBL etc all cant make money. Maybe the only winners are CMO with sales of new Ford Rangers

Haha that last bit gave me a good chuckle. So true though, and that in part reflects the culture that means the above companies not making any money.

[RGR367]

On NBR paywall, FMA probes CBL disclosures. What do you think will happen? .........................nothing! Hopefully not for the sake of you shareholders. I'm not.

[BlackPeter]

Time to honor the CBL board which worked so hard to make shareholder funds disappear over night?

Obviously - we don't know yet whether it was just sheer incompetence or worse, but their silence is deafening.

So - lets start with the chair Sir John Wells KNZM, FCA:

http://www.cblinsurance.com/about-us/board-of-directors/#johnwells


Sir John has a background in governance and financial services in both private and public organisations, a career in merchant and investment banking, and extensive experience in sports governance.

He is currently the Chairman of Fisher Funds Management Limited, Sheffield North Island Limited, MartinJenkins & Associates Limited and World Masters Games 2017 Limited, and an advisory board member of Marsh Limited. He recently stepped down from the role of non-executive Chair of Bancorp, a merchant and investment banking group of companies he co-founded in 1987.

Sir John was appointed the inaugural Chairman of SPARC (now known as Sport NZ), a position he held for nine years until 2009. He was a member of the Rugby World Cup Bid Committee which was successful in gaining the hosting rights for the 2011 RWC and subsequently became a Government appointee to the Board of Rugby NZ 2011 Ltd. In 1999, Sir John chaired the National Coordinating Committee responsible for the delivery of New Zealand high performance sport.

Sir John was awarded a Distinguished Companion of The New Zealand Order of Merit (DCNZM) for his services to business and sport in the New Year Honours 2009 and was subsequently invested with a Knighthood. At the 2013 Halberg Awards he was the recipient of the Sport New Zealand Leadership Award. Sir John is Fellow of Chartered Accountants Australia & New Zealand, and Fellow of the Chartered Institute of Secretaries.




Always good to see when deserving New Zealanders get knighted.

Still - I am wondering how the investors and Kiwisavers who joined Fisher Funds feel these days? He is chairing this fund as well. He is as well sitting in the governance of Sheffield North Island Limited, MartinJenkins & Associates Limited and he is an advisory board member of Marsh Limited.

I am sure all these investors will feel safe in the knowledge that a real knight is watching over their investments.

[stoploss]

Time to honor the CBL board which worked so hard to make shareholder funds disappear over night?

Obviously - we don't know yet whether it was just sheer incompetence or worse, but their silence is deafening.

So - lets start with the chair Sir John Wells KNZM, FCA:

http://www.cblinsurance.com/about-us/board-of-directors/#johnwells



Always good to see when deserving New Zealanders get knighted.

Still - I am wondering how the investors and Kiwisavers who joined Fisher Funds feel these days? He is chairing this fund as well. He is as well sitting in the governance of Sheffield North Island Limited, MartinJenkins & Associates Limited and he is an advisory board member of Marsh Limited.

I am sure all these investors will feel safe in the knowledge that a real knight is watching over their investments.

Most worrying a "background in governance" but according to the RBNZ the reason why they pulled the trigger was they sent 50 Mio offshore when they needed permission ........

[JoeM]

https://www.stuff.co.nz/business/101916056/peter-harris-withdraws-from-entrepreneur-of-the-year-awards-amid-company-troubles

Looks like old mate didnt want to claim any more awards!

[minimoke]

Always good to see when deserving New Zealanders get knighted.
Four gongs on the chopping block.

Naughty Sir Bob Jones for his satirical piece suggesting Maori might like a "Gratitude Day"

Sir Ralph Norris for overseeing shareholder wealth destruction in FBU

And now Sir John Wells.

I'm also going to put Sir John Key on the list for allowing Air NZ to do a Safety Video based in Antartica.

[IAK]

Time to honor the CBL board which worked so hard to make shareholder funds disappear over night?

Obviously - we don't know yet whether it was just sheer incompetence or worse, but their silence is deafening.

So - lets start with the chair Sir John Wells KNZM, FCA: http://www.cblinsurance.com/about-us/board-of-directors/#johnwells

Always good to see when deserving New Zealanders get knighted.

Still - I am wondering how the investors and Kiwisavers who joined Fisher Funds feel these days? He is chairing this fund as well. He is as well sitting in the governance of Sheffield North Island Limited, MartinJenkins & Associates Limited and he is an advisory board member of Marsh Limited.

I am sure all these investors will feel safe in the knowledge that a real knight is watching over their investments.

Time's up for the NZ Honours system, lost credibility decades ago.

[Balance]

https://www.stuff.co.nz/business/101916056/peter-harris-withdraws-from-entrepreneur-of-the-year-awards-amid-company-troubles

Looks like old mate didnt want to claim any more awards!

How sad.

Out goes the door with the credibility of the EY Entrepreneur of the Year award.

But notice that FMA and NZX have sprung into action - as if it really matters as there's nothing to levy a fine at.

What a sick joke the NZX and FMA are at looking proactively after investors' interests.

[minimoke]

How sad.

Out goes the door with the credibility of the EY Entrepreneur of the Year award.


Since I am in the mood for lists:
Also Deloittes for putting PEB on their Top50 fast growth companies.

And possibly a bit unfair, but timely, PWC for stuffing up Oscar Awards

[winner69]

Mr Harris total rem in 2016 was a cool $2.6m

[Balance]

Mr Harris total rem in 2016 was a cool $2.6m

Nothing though compared to the sale of 5m shares at $3.26 to 'aid liquidity'?

[Balance]

Good to see they avoid Sky TV. And people pay for this funds management!

They had Wynyard when it went under!

15.8m shares in fact.

[BlackPeter]

Well, so lets look at another member of the distinguished CBL - board: Alistair Hutchinson - the deputy chair and an "order of merit" for Samoa. Good to know that Samoa seems to use similar criteria like New Zealand to recognize their most distinguished people.

Alistair Hutchison - Deputy Chairman


Alistair participated in the buy-out of CBL Insurance in 1996. He has a background as an economist and has specialist expertise in financial services, public administration and micro lending.

Alistair is a past member of the Board of Governors, World Bank, International Monetary Fund and Asian Development Bank and was previously the Financial Secretary of Samoa. He currently holds equity participatory positions in various financial services companies in New Zealand and the Southwest Pacific and is Chairman of Federal Pacific Group Limited.

Alistair has post graduate degrees in Accounting and Economics from Victoria University, New Zealand. In 2014 he was awarded the order of Merit of Samoa for services to Samoa.

He is as well chairman of the Federal Pacific Group Limited.

https://www.propbd.co.nz/hutchisons-federal-pacific-to-take-cornerstone-stake-in-geneva-finance/

Ouch - I guess this was after the GFC, but is it really an advantage to be affiliated with Geneva finance? Must have missed that during my due diligence process into CBL.

[minimoke]

Peter Harris no longer off to Monaco for his EY Entrepreneur of the Year representative. Does second place getter get to go?

Hers Peters winning entry

Peter Harris, CBL Corporation
Risky business built on trust
Old school values and building enduring relationships have helped Peter Harris go global.
In building up a brand with eight offices, spread across 25 countries and with close to 550 employees, in both an entrepreneurial and business sense Peter Harris thrives on risk.
Beginning his career as an accountant for the Fletcher Group, he left the corporate world to pursue export marketing and merchant banking. Peter made his move into the insurance world in 1989 as an executive director of Boston Marks Group.
His next foray into the risk mitigation world came with his participation in the buyout of CBL Corporation. When he took the helm in 2000 the business had two employees and one office.
Under Peter’s leadership CBL has grown, both organically and through acquisition, into an international specialist insurer and reinsurer specialising in credit and financial risk.
CBL has achieved an annual growth rate of 37% over 16 years. Peter led the business through a highly successful IPO in 2015 followed by listing on both the NZX and ASX. This was a first in New Zealand under the new Financial Markets Authority listing rules. In June 2017 the company entered the S&P/NZX50 Index.
Significantly, 98% of revenue is derived from overseas markets. In order to achieve this Peter's sought to build strong partnerships with expert distributors, with proven capability, around the world.
This personal approach, blended with old school values, conquered overcame what could have been a game changing hurdle; namely new partners agreeing to do business with a small specialist insurer from New Zealand that no one had heard of.
Moreover CBL has achieved this growth without a credit rating in the early years, simply because it was trusted.
Going global has required Peter to customise solutions to meet customer needs. The company has further delivered real value to customer transactions by providing intelligent risk capital and technological innovation.

We remember where Old School values got Alan Hubbard. EY dont

[Balance]

Moreover CBL has achieved this growth without a credit rating in the early years, simply because it was trusted.


We remember where Old School values got Alan Hubbard. EY dont

No mention of CBL dropping S&P ratings after their downgrade in 2012?

[Beagle]

FMA investigating. http://www.sharechat.co.nz/article/43b85fb6/fma-looking-into-cbl-disclosure-md-harris-withdraws-from-global-entrepreneur-contest.html?utm_medium=email&utm_campaign=FMA%20looking%20into%20CBL%20disclosu re%20MD%20Harris%20withdraws%20from%20global%20ent repreneur%20contest&utm_content=FMA%20looking%20into%20CBL%20disclosur e%20MD%20Harris%20withdraws%20from%20global%20entr epreneur%20contest+CID_8866de39b5aa021aea4ec4e54f0 f0598&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle43b85fb6fma-looking-into-cbl-disclosure-md-harris-withdraws-from-global-entrepreneur-contesthtml

Anyone with a wet used bus ticket should forward this to FMA so the appropriate punishment can be dispensed in due course. :ohmy:

[Lola]

No mention of CBL dropping S&P ratings after their downgrade in 2012?

This horse has been well and truly flogged on this site.
Can I suggest a new game and call for suggestions of which NZX 50 stock will be next to bite the dust.

After all most of the comments on CBL have been made with the benefit of hindsight.
Let’s see how good we really are.
A start point for some will obviously be to look at sponsoring Brokers and go from there.

[Balance]

This horse has been well and truly flogged on this site.
Can I suggest a new game and call for suggestions of which NZX 50 stock will be next to bite the dust.

After all most of the comments on CBL have been made with the benefit of hindsight.
Let’s see how good we really are.
A start point for some will obviously be to look at sponsoring Brokers and go from there.

Good idea.

Let's start with your pick*, Mr Foresight.

*Minimum market cap must be $100m as the likes of VIL, Snakk etc are too obvious.

[winner69]

NZX50 might need to replace CBL

Maybe HLG will get another go ...wasn’t that long ago they were kicked out but should be back in.

But then might be the kiss of death again.

[minimoke]

This horse has been well and truly flogged on this site.
.
Theres no such thing as too much flogging for a failure like this. Its more than the FMA will hand out.

[Brain]

FMA investigating. http://www.sharechat.co.nz/article/43b85fb6/fma-looking-into-cbl-disclosure-md-harris-withdraws-from-global-entrepreneur-contest.html?utm_medium=email&utm_campaign=FMA%20looking%20into%20CBL%20disclosu re%20MD%20Harris%20withdraws%20from%20global%20ent repreneur%20contest&utm_content=FMA%20looking%20into%20CBL%20disclosur e%20MD%20Harris%20withdraws%20from%20global%20entr epreneur%20contest+CID_8866de39b5aa021aea4ec4e54f0 f0598&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle43b85fb6fma-looking-into-cbl-disclosure-md-harris-withdraws-from-global-entrepreneur-contesthtml

Anyone with a wet used bus ticket should forward this to FMA so the appropriate punishment can be dispensed in due course. :ohmy:

For certain crimes against humanity or investors as in this case I think that a good Stoning would be in order.

We should all send the FMA a bag of rocks. Trouble is the Pooftas wouldn't know how to throw them.

https://www.youtube.com/watch?v=MIaORknS1Dk

[blackcap]

Think you've set the bar too high ($100m) there, as prospects such as AWF and EVO escape the net.
And that makes PEB much too easy as a target. So I'll pass on it.

That said, here goes, ranked highest to least; OHE, TRA and NZO.

NZO? They are pretty much cashed up with no liabilities?

[Lola]

Think you've set the bar too high ($100m) there, as prospects such as AWF and EVO escape the net.
And that makes PEB much too easy as a target. So I'll pass on it.

That said, here goes, ranked highest to least; OHE, TRA and NZO.

OHE ... u beat me to it
Not that the Kapiti guru would agree
FNZ floated it you see

Now unBal
Your turn

[Beagle]

For certain crimes against humanity or investors as in this case I think that a good Stoning would be in order.

We should all send the FMA a bag of rocks. Trouble is the Pooftas wouldn't know how to throw them.

https://www.youtube.com/watch?v=MIaORknS1Dk

LOL...thanks for the laugh. Trouble is the ol "let he who is without sin cast the first stone" readily springs to mind.:ohmy:

[minimoke]

Think you've set the bar too high ($100m) there, as prospects such as AWF and EVO escape the net.
And that makes PEB much too easy as a target. So I'll pass on it.

That said, here goes, ranked highest to least; OHE, TRA and NZO.
i'll play. SKY. With huge writeoff of Goodwill (is there a bigger trough with piggy snouts in it?)

[BlackPeter]

This horse has been well and truly flogged on this site.
Can I suggest a new game and call for suggestions of which NZX 50 stock will be next to bite the dust.

After all most of the comments on CBL have been made with the benefit of hindsight.
Let’s see how good we really are.
A start point for some will obviously be to look at sponsoring Brokers and go from there.

Actually - I think we only did enough flogging if & when all the people responsible for this mess sit behind bars. Given that they don't (yet) - clearly not enough flogging done.

Still a good idea to consider who is next? I'd propose to start with the companies who have similar quality of governance like CBL had. However - THIS is the CBL thread! Shouldn't this go into a new thread? We could even start another competition - the winner is who correctly predicts (and in advance) the most defaulters during the calendar year.

[minimoke]

Still a good idea to consider who is next? I'd propose to start with the companies who have similar quality of governance like CBL had. However - THIS is the CBL thread! Shouldn't this go into a new thread? We could even start another competition - the winner is who correctly predicts (and in advance) the most defaulters during the calendar year.
I've got first dibs on MJP. It used to have a market cap of $100m - currently listed on ASX but about to appear for a short time on NZX Alternative market. (we do need a separate thread!

[blackcap]

Exactly. There no reason for this to be listed because they don't have purpose other than
to put the cash into the managers and directors pockets. They ain't gunna stop that are they??

Ah yes, I thought this was a comp to see which stocks are going to go bust. But yes to leave the market is a distinct possibility indeed :)

[Balance]

OHE ... u beat me to it
Not that the Kapiti guru would agree
FNZ floated it you see

Now unBal
Your turn

OHE wouldn't go broke. It will get taken over first.

PEB - floated by Forsyth Barr eon ago and with Harbour as a shareholder (and was with Wynyard and CBL too!) - they know how to pick 'em!

Forsyth Barr - Feltex, Wynyard, CBL and one could also add, Credit Sails and South Canterbury Finance!

[Snow Leopard]

CBL seems to be a much misunderstood company.
I just hope that it is not me doing the misunderstanding.

Best Wishes
Paper Tiger

Well, so much for hope as an investment strategy !

Best Wishes
Paper Tiger

[hardt]

Well, so much for hope as an investment strategy !

Best Wishes
Paper Tiger

Those that thought they understood CBL only understood what was available to the market... at face value, a rather sound business.

Although I am angry at myself for getting it wrong... I can still justify the initial investment given what was in front of me.

From being up 20% to possibly being down 100% was not on the list of outcomes I had in mind... 3% of my portfolio so could be worse.

[Balance]

As expected, an avalanche of articles and assessments about CBL :

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12004875

Excerpt : "But in an email Harris said there was a wider story to be told about how CBL got to where it is and where it might be heading. "The facts will show some mistakes we have made, and the cause and effect of those, and just where we are and why, along with our plan for dealing with these issues."

Fair enough - should provide the guy a chance to give his side of the story. So put away those stones in the meantime?

https://www.insurancetimes.co.uk/collapsing-insurer-cbl-rapped-for-unauthorised-payments-to-alpha/1426527.article
https://www.insuranceage.co.uk/insurer/3290881/elite-named-in-cbl-insurance-affidavit

Alpha & Elite named as the two insurance companies CBL paid money to, in contravention of RBNZ's instructions.

Of concern is this : "Elite went into run off in July 2017 and the legal document noted that at the time PwC, which was conducting a report into Elite, was concerned about CBL’s ability to meet reinsurance obligations to Elite.
PwC also questioned the sufficiency of CBL’s reserving and said CBL’s reserves were materially lower than those of Elite, a Gibraltar legal expenses insurer."

Alarm bells here - CBL's situation was already of concern way back in July 2017.

Who knew, why was the market not advised and who sold shares with that knowledge?

[Balance]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12005410

Brian Gaynor with his take on CBL.

Sorry, Brian but you are/were of the biggest supporter of wunderkid Weldon's style of running NZX (into the ground) so your criticism of the NZX means bugger all.

[whatsup]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12005410

Brian Gaynor with his take on CBL.

Sorry, Brian but you are/were of the biggest supporter of wunderkid Weldon's style of running NZX (into the ground) so your criticism of the NZX means bugger all.

Bal, don't forget that Brian G used to be or still is a contributor to this forum, a very badly needed one I might add.

[Balance]

Bal, don't forget that Brian G used to be or still is a contributor to this forum, a very badly needed one I might add.

Yup - why he (along with the useless board of sleeping NZX directors) should reflect on how he supported, for short term gains, the marginalization and buggerisation of the NZX and capital markets in NZ and ASX is now the big winner.

Huge crocodile tears will not change that fact.

Brian wrote this : "As far as this columnist is concerned, the clear answer to all the issues raised in this column is that the regulatory, board, investment banking and broker analysts' oversight of CBL has been extremely weak. New Zealand investors deserve much better than this."

Yup - NZ investors deserve better than a NZX which focused exclusively on extracting maximum profits at market participants' expense and NZ now reaps the results of that focus.

[bull....]

As expected, an avalanche of articles and assessments about CBL :

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12004875

Excerpt : "But in an email Harris said there was a wider story to be told about how CBL got to where it is and where it might be heading. "The facts will show some mistakes we have made, and the cause and effect of those, and just where we are and why, along with our plan for dealing with these issues."

Fair enough - should provide the guy a chance to give his side of the story. So put away those stones in the meantime?

https://www.insurancetimes.co.uk/collapsing-insurer-cbl-rapped-for-unauthorised-payments-to-alpha/1426527.article
https://www.insuranceage.co.uk/insurer/3290881/elite-named-in-cbl-insurance-affidavit

Alpha & Elite named as the two insurance companies CBL paid money to, in contravention of RBNZ's instructions.

Of concern is this : "Elite went into run off in July 2017 and the legal document noted that at the time PwC, which was conducting a report into Elite, was concerned about CBL’s ability to meet reinsurance obligations to Elite.
PwC also questioned the sufficiency of CBL’s reserving and said CBL’s reserves were materially lower than those of Elite, a Gibraltar legal expenses insurer."

Alarm bells here - CBL's situation was already of concern way back in July 2017.

Who knew, why was the market not advised and who sold shares with that knowledge?

should be investigated who knew about the investigations by rbnz and then who sold shares , the fact it wasnt announced to the nzx means anyone in the know who sold has committed insider trading.

could be a nice defence in the future

[whatsup]

I wouldn't be surprised if the FMA doesn't have a go at the fishheads with their involvement and lack of governence!

[carrom74]

I wouldn't be surprised if the FMA doesn't have a go at the fishheads with their involvement and lack of governence!

The same FMA .. which gave a clean chit to Intueri...

[bull....]

in bed with the big end of town for sure

[BlackPeter]

I wouldn't be surprised if the FMA doesn't have a go at the fishheads with their involvement and lack of governence!


The same FMA .. which gave a clean chit to Intueri...


in bed with the big end of town for sure

You are raising very valid concerns. I think however that this time might be different. The world is watching how we deal with this train wreck (just have a look at all the articles in Europe about CBL), and if we don't manage this time to properly clean up this mess and make sure it won't happen again, than it might be that all NZ shareholders will pay for it with lower share prices and all NZ creditors will pay for it with higher interest rates.

We can lose credibility only once in the eyes of the world, and if investors get the impression that compliance with regulations is in NZ only on a voluntary basis for the old boys club, than they will stop sending us their hard earned money to pop up our share markets and provide for our mortgages. If the regulators don't get it right this time, we risk dropping share prices due to money leaving Wild West NZ and subsequently a dropping NZ$ (everybody loses) and much higher interest rates.

I guess - this is not the first example for extremely weak governance in NZX companies. Pick WYN, IQE, RAK or recently FBU. And this are just some examples. Now it is CBL with a biggie. We better make sure the list does not get longer. We can't afford to if we want to keep a working and reasonable priced capital market in our economy.

[bull....]

just reading fonterra has put a gagging order on a former director on friday to stop them disclosing info about the carry on in board meetings also nzx rural ? is it related to the nzx ? ... hope its not another bad look in governance in nz

https://www.stuff.co.nz/business/farming/dairy/101948456/fonterra-takes-out-injunction-against-former-board-member-leonie-guiney

[BlackPeter]

...

That said, here goes, ranked highest to least; OHE, TRA and NZO.

Sorry, missed that initially. I would be interested to learn why you think TRA is likely to follow CBL going down the gurgler. However - given that this is the CBL thread - is it o.k. we continue the discussion on the TRA thread?

https://www.sharetrader.co.nz/showthread.php?4371-TRA-Turners-Automotive-Group-previously-TNR-Turners-Limited&p=706578&viewfull=1#post706578

[Balance]

https://www.rbnz.govt.nz/-/media/ReserveBank/Files/News/2018/Reserve-Bank-affidavit-to-the-High-Court-re-CBL-Insurance.pdf?la=en

Page 32 : Letter from RBNZ to Peter Harris - 27 July 2017 - "The Central Bank of Ireland has recently issued a direction to CBLIE on the grounds that CBLIE ...etc ...etc ....is likely to be unable to meet its obligations ...etc ...etc. THIS IS BASED ON ITS ASSESSMENT OF CBL."

A check of announcements from CBL shows that there has been no reference whatsoever to this direction from the Central Bank of Ireland! Surely that was a very material piece of information which would have definitely impacted upon the perception of CBL with consequential share price impact.

What we saw share price however was a sell off from beginning of August 2017 - from a high of $3.78 then to a low of $2.82 by middle of September 2017, a drop of 25%.

So who knew, when did they know and did they sell shares with that knowledge? Hope FMA and NZX are up to the job as they have shown themselves to be bottom of the cliff inspectors so far.

[winner69]

https://www.rbnz.govt.nz/-/media/ReserveBank/Files/News/2018/Reserve-Bank-affidavit-to-the-High-Court-re-CBL-Insurance.pdf?la=en

Page 32 : Letter from RBNZ to Peter Harris - 27 July 2017 - "The Central Bank of Ireland has recently issued a direction to CBLIE on the grounds that CBLIE ...etc ...etc ....is likely to be unable to meet its obligations ...etc ...etc. THIS IS BASED ON ITS ASSESSMENT OF CBL."

A check of announcements from CBL shows that there has been no reference whatsoever to this direction from the Central Bank of Ireland! Surely that was a very material piece of information which would have definitely impacted upon the perception of CBL with consequential share price impact.

What we saw share price however was a sell off from beginning of August 2017 - from a high of $3.78 then to a low of $2.82 by middle of September 2017, a drop of 25%.

So who knew, when did they know and did they sell shares with that knowledge? Hope FMA and NZX are up to the job as they have shown themselves to be bottom of the cliff inspectors so far.

Very interesting stuff eh Balance

PS — you can see why Toby Fiennes wants to be know as just that ..poor bugger

[Balance]

Very interesting stuff eh Balance

PS — you can see why Toby Fiennes wants to be know as just that ..poor bugger

https://www.nbr.co.nz/article/rbnz-says-insurance-sector-has-improved-under-its-watch-b-187456

Famous last words?

Actually, I think the RBNZ has done a good job with CBL on balance.

They placed CBL under close supervision, gave CBL time to raise more capital but as the old saying goes, 'you can lead a horse to water but you cannot force it to drink', CBL decided it knew better.

The rrest as they say, is history.

[Balance]

https://www.insurancetimes.co.uk/capital-solvency-probably-less-than-zero--regulator-shock-findings-on-cbl-insurance-/1426534.article

Excerpt : "CBLI had significantly under-reserved its French business to such an extend its adjusted capital for solvency purposes (ie excluding inadmissible components) was most likely to be less than zero’, according to the court documents."

CBL certainly getting plenty of coverage and publicity overseas.

NOT good for NZ and RBNZ!

FMA? Useless anyway so who cares.

[Lola]

https://www.insurancetimes.co.uk/capital-solvency-probably-less-than-zero--regulator-shock-findings-on-cbl-insurance-/1426534.article

Excerpt : "CBLI had significantly under-reserved its French business to such an extend its adjusted capital for solvency purposes (ie excluding inadmissible components) was most likely to be less than zero’, according to the court documents."

CBL certainly getting plenty of coverage and publicity overseas.

NOT good for NZ and RBNZ!

FMA? Useless anyway so who cares.

Maybe FMA should get Harris or Hutchinson to flip.?
They could explain what’s happened and save everyone a lot of time.
Might even discover the truth!

[Marilyn Munroe]

I want to have a moan about the competency of governance in financial sector companies in New Zealand.

Why do we not have managers competent enough to tend the ledgers, chase the rascals, cultivate the virtuous, and have the experience and grit to survive both feast and famine?

CBL Insurance is a prime example of this shortfall. There was already a road map of the dark dangers of underwriting guarantee insurance in foreign lands with the previous failure of local insurer Standard Insurance.

The example of Standard should have set off alarm bells with those appointed to steer the CBL ship safely. What stress testing was done by auditors, audit committee, or directors before the reckless plunge into underwriting something prone to concentration of risk in a far away foreign land.

With this level of incompetence is it any wonder our financial institutions are run from Sydney or Melbourne.

Boop boop de do
Marilyn

[winner69]

makes you wonder where all the surety and guarantee bonds in the India infrastructure will (or would of) end up

[Brain]

[QUOTE=Marilyn Munroe;706712]I want to have a moan about the competency of governance in financial sector companies in New Zealand.

It’s just not the financial sector. Its a problem with a lot of NZ listed companies. One of the problems in investing is sorting out who all the dickheads are. This is particularly the case with IPOs

[Balance]

[QUOTE=Marilyn Munroe;706712]I want to have a moan about the competency of governance in financial sector companies in New Zealand.

It’s just not the financial sector. Its a problem with a lot of NZ listed companies. One of the problems in investing is sorting out who all the dickheads are. This is particularly the case with IPOs

For starters - avoid IPOs from Forsyth Barr + PEs.

[Lola]

[QUOTE=Brain;706752]

For starters - avoid IPOs from Forsyth Barr + PEs.

Look you have to be fair.

Since about 2002 Forskin Bra have been Fund Managers not Investment Bankers or even Brokers
Great Model though.

[stoploss]

I find them quite exposed to property construction cycles and the French market and legislation in particular. Good profits but too much concentration to be prudent for an insurance company.

I just read the first page of this thread very interesting. Halebop congratulations , great foresight shown in this post . Maybe you should have been on the board !!

[Balance]

http://www.sharechat.co.nz/article/9d686fbf/john-wells-steps-down-as-chair-of-fisher-funds-to-focus-on-cbl.html

Guess he is expecting a lot of questions and a lot of investigations ahead.

Maybe should have put more time and effort into CBL rather than sit on board of Fisher Funds?

Or was he asked to leave - gently?

[winner69]

http://www.stuff.co.nz/business/world/9249149/Workers-await-5-7m-ruling



Yes indeed the first few pages of this thread quite illuminating

Halebop is a guru (I think he was an actuary in a past life)....expressed his concerns about concentration of risk

Grunter wasn’t keen on the long tail liabilities and suggested it would probably catch up with them eventually

Marilyn bought up what history has done to small insurers in NZ

T_j was put off by the ‘questionable’ past of some of the Directors

The Stuff article linked above has 3 cases against CBL. One was about CBL refusal to pay out on a bond re redundancy payments. Another guy is claiming millions re CBL selling unlawful policies in the Us and claimed ‘alleged deceit, breach of fiduciary duty and negligence.’. The third involved a former business partner claiming he only got half of what his shares were worth when Harris et all bought them off him.

But that didn’t stop the IPO being a great exciting success and punters including several Sharetrader veterans were seduced by the growth story and the rising share price and piled into CBL

That’s all history now ....but maybe there is a lesson in all this somewhere.

[winner69]

http://www.sharechat.co.nz/article/9d686fbf/john-wells-steps-down-as-chair-of-fisher-funds-to-focus-on-cbl.html

Guess he is expecting a lot of questions and a lot of investigations ahead.

Maybe should have put more time and effort into CBL rather than sit on board of Fisher Funds?

Or was he asked to leave - gently?

Did Fisher Funds have any CBL shares?

[minimoke]

http://www.sharechat.co.nz/article/9d686fbf/john-wells-steps-down-as-chair-of-fisher-funds-to-focus-on-cbl.html

Guess he is expecting a lot of questions and a lot of investigations ahead.

Maybe should have put more time and effort into CBL rather than sit on board of Fisher Funds?

Or was he asked to leave - gently?
Obviously he was asked to leave. Not much now he can do for CBL - it will all be handled by lawyers and accountants. The Board will just be there as a figurehead rubber stamp

[BlackPeter]

http://www.sharechat.co.nz/article/9d686fbf/john-wells-steps-down-as-chair-of-fisher-funds-to-focus-on-cbl.html

Guess he is expecting a lot of questions and a lot of investigations ahead.

Maybe should have put more time and effort into CBL rather than sit on board of Fisher Funds?

Or was he asked to leave - gently?

Sir Johns departure from chairing Fisher Funds was swift but certainly not before time. I take it Fisher Funds customers started to ask the company whether he is the best chair to look after their nest egg. I did last week - and given their super fast and personal response to my email do I assume that I was not the only of their customers expressing concerns.

[Lola]

Did Fisher Funds have any CBL shares?

VERY good question. I guess FMA will want to know the answer to that and if so when they sold. Likewise with other Fund managers with "connections".
The world is watching.

[BlackPeter]

Did Fisher Funds have any CBL shares?

Talked last week with the CEO - he said, they don't.

[Lola]

Talked last week with the CEO - he said, they don't.

Not the point. Re phrase your question. Did they ever and if so when did they sell??

[Sideshow Bob]

Not the point. Re phrase your question. Did they ever and if so when did they sell??

Article confirms 'Fisher Fund had no exposure to CBL' but doesn't say anything about the past.

[BlackPeter]

Not the point. Re phrase your question. Did they ever and if so when did they sell??

Very much the point for Fisher Fund customers ;); But yes, I do understand what you are saying and no, I don't know the answer to this. Can't remember any relevant SSH, though ....

[Balance]

https://www.insurancebusinessmag.com/uk/news/breaking-news/troubles-at-cbl-see-alpha-insurance-go-into-liquidation-93956.aspx

So CBL made the $42m payment to Alpha which can now pay out on insurance claims as its book is steadily liquidated.

Good one, CBL directors & management - most honorable of them to meet their reinsurance obligations (in contravention of RBNZ directions) to ensure that Alpha's obligations can meet its obligations!

What a bunch of freaking turkeys.

[Balance]

[QUOTE=Marilyn Munroe;706712]I want to have a moan about the competency of governance in financial sector companies in New Zealand.

It’s just not the financial sector. Its a problem with a lot of NZ listed companies. One of the problems in investing is sorting out who all the dickheads are. This is particularly the case with IPOs

https://www.fool.com.au/2018/03/06/the-big-investment-sin-im-guilty-of/

so true.

[kiora]

Rationalise it as <4 % of portfolio & move on otherwise its too easy to miss out on next opportunity :)

[BlackPeter]

Rationalise it as <4 % of portfolio & move on otherwise its too easy to miss out on next opportunity :)

Sure - life goes on and you are right, we should not lose the view on other opportunities (no matter what percentage of our portfolios CBL represented).

However - the CBL story is a clear indication that we do have big governance and regulatory problems in our country. They must be solved.

Ignoring the lessons from CBL means we are doomed to repeat the story - talking about the lessons helps others (perhaps) to avoid the same mistakes.

As well - whatever happened - either there have been people ignoring our regulations and likely breaking the law, or alternatively our regulations and laws are a joke. I don't know yet, which of these options it is, but if this is not properly investigated and acted upon, than our market will lose credibility - and we all will pay for it (as long as we are invested on the NZX).

A wet bus ticket won't do the job this time.

[winner69]

Sure - life goes on and you are right, we should not lose the view on other opportunities (no matter what percentage of our portfolios CBL represented).

However - the CBL story is a clear indication that we do have big governance and regulatory problems in our country. They must be solved.

Ignoring the lessons from CBL means we are doomed to repeat the story - talking about the lessons helps others (perhaps) to avoid the same mistakes.

As well - whatever happened - either there have been people ignoring our regulations and likely breaking the law, or alternatively our regulations and laws are a joke. I don't know yet, which of these options it is, but if this is not properly investigated and acted upon, than our market will lose credibility - and we all will pay for it (as long as we are invested on the NZX).

A wet bus ticket won't do the job this time.

Jacinda will put a Working Group together to sort this out

[Balance]

Jacinda will put a Working Group together to sort this out

To be fair to RBNZ, I think they call this one late but they did take preemptive action by getting the court to appoint the interim liquidator so CBL cannot transfer any more funds overseas.

In doing so, they have prevented CBL from reducing the amount of cash available to all creditors and claimants, rather than the preferred few favored by the directors.

In RBNZ's wildest dreams, they would not have anticipated the directors of the CBL ignoring their instructions and guidance!

[hardt]

CBL Corp managing director Peter Harris has said there was a wider story to be told about how CBL got to where it is and where it might be heading. "The facts will show some mistakes we have made, and the cause and effect of those, and just where we are and why, along with our plan for dealing with these issues."

Behind the paywall on NBR today a title reads "more than $600M seen wiped off CBL equity."

[Balance]

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

https://www.interest.co.nz/insurance/92491/harbour-asset-management-values-cbl-shares-last-traded-317-28-cents-lloyds-london

Lowered now by Harbour to 28c.

So much for their analytical assessment which valued the shares at 88c.

Fact is, the company is gone - it will be tied up in investigations and litigation for the next decade even if there's any funds left.

[winner69]

To be fair to RBNZ, I think they call this one late but they did take preemptive action by getting the court to appoint the interim liquidator so CBL cannot transfer any more funds overseas.

In doing so, they have prevented CBL from reducing the amount of cash available to all creditors and claimants, rather than the preferred few favored by the directors.

In RBNZ's wildest dreams, they would not have anticipated the directors of the CBL ignoring their instructions and guidance!

Agree

Beating up on the RBNZ and the FMA in this case is like blaming the cops for a murder

[King1212]

Stamford insurance step in to cover all the warranty CBL's clients....Goodness me...what a freaking mess!! hope u all did not lose too much on this sinking ship!

[Rob Optimist]

Mess alright, have written this one off. Bit disappointed that the red flags weren’t flown a bit more vigorously.
Good luck if anyone gets 88 cents a share.
Now I have to go and concentrate on my SLI and PEB shares.....

[couta1]

Mess alright, have written this one off. Bit disappointed that the red flags weren’t flown a bit more vigorously.
Good luck if anyone gets 88 cents a share.
Now I have to go and concentrate on my SLI and PEB shares..... Don't concentrate, just sell both of those dogs and feel the relief afterwards.

[trader_jackson]

Mess alright, have written this one off. Bit disappointed that the red flags weren’t flown a bit more vigorously.
Good luck if anyone gets 88 cents a share.
Now I have to go and concentrate on my SLI and PEB shares.....

Who would have thought just a month and a bit ago PEB and SLI would outlast the top 50 CBL Insurance?

[couta1]

Who would have thought just a month and a bit ago PEB and SLI would outlast the top 50 CBL Insurance? Yep, who would have thought, nethertheless, both PEB and SLI have been incredible wealth destroyers for many over the last few years.

[Balance]

https://www.interest.co.nz/opinion/92501/david-hargreaves-says-cbl-disaster-appears-have-revealed-massive-loopholes-our

FMA shows that its dentures are intact.

Freaking heck - around $130m of shares changed hands between 25 July when RBNZ wrote to CBL (and by association, FMA became aware) to when the stock was suspended from trading.

Those who bought (one being Harbour who coud not get enough of CBL) did so with the RBNZ, FMA and NZX aware that CBL was being investigated for under-provisioning, but who chose to do nothing to inform the market!

[winner69]

https://www.interest.co.nz/opinion/92501/david-hargreaves-says-cbl-disaster-appears-have-revealed-massive-loopholes-our

FMA shows that its dentures are intact.

Freaking heck - around $130m of shares changed hands between 25 July when RBNZ wrote to CBL (and by association, FMA became aware) to when the stock was suspended from trading.

Those who bought (one being Harbour who coud not get enough of CBL) did so with the RBNZ, FMA and NZX aware that CBL was being investigated for under-provisioning, but who chose to do nothing to inform the market!

First comment under that article says Deposit Power gone belly up ....the dominoes continue to fall

[percy]

https://www.interest.co.nz/opinion/92501/david-hargreaves-says-cbl-disaster-appears-have-revealed-massive-loopholes-our

FMA shows that its dentures are intact.

Freaking heck - around $130m of shares changed hands between 25 July when RBNZ wrote to CBL (and by association, FMA became aware) to when the stock was suspended from trading.

Those who bought (one being Harbour who coud not get enough of CBL) did so with the RBNZ, FMA and NZX aware that CBL was being investigated for under-provisioning, but who chose to do nothing to inform the market!

Thank you for the link.
An excellent article.
I have been thinking of the wealth destroyed by CBL in NZ, RFG and BIG in Aussie.
Continuous disclosure was not given by CBL.
Very little disclosure was given by RFG.
BIG really did take the prize with their false cash flow figures.
How investors are expected to see through false statements,and lack of disclosure beats me.
Any one who has lost money in any of these three, have been totally shafted by a pack of Australasian arsehxles .
Jail would put them with their peers.!

[RTM]

https://www.interest.co.nz/opinion/92501/david-hargreaves-says-cbl-disaster-appears-have-revealed-massive-loopholes-our

FMA shows that its dentures are intact.

Freaking heck - around $130m of shares changed hands between 25 July when RBNZ wrote to CBL (and by association, FMA became aware) to when the stock was suspended from trading.

Those who bought (one being Harbour who coud not get enough of CBL) did so with the RBNZ, FMA and NZX aware that CBL was being investigated for under-provisioning, but who chose to do nothing to inform the market!

Thanks Balance. Doesn’t fill one with confidence does it ? Shouldn’t our market just take its lead from what happens in other major markets ? ASX USA, UK, etc. No need to reinvent the wheel.

[bull....]

well if all the regulators knew something was up surely a hundred other people knew , fma should be investigating insider trading but i guess its not insider trading now because the fma says it was not material the info they all new.


wild west still alive and well in nz

https://www.interest.co.nz/opinion/92501/david-hargreaves-says-cbl-disaster-appears-have-revealed-massive-loopholes-our

[lawson]

From the AFR

10,000 property buyers caught in Deposit Power Collapse

A leading national property finance company has collapsed potentially leaving an estimated 10,000 residential, commercial and property investors in the lurch about the fate of nearly $300 million worth of deposits.

Deposit Power, which provided interim finance to property buyers, has closed its doors after the collapse of New Zealand's CBL's insurance, which was an issuer and guarantor of deposit bonds.

CBL has yet to inform Australian liquidators about whether Sydney-based Deposit Power will fully, or partially, back the bonds.

Deposit Power had links with most of the major property broker networks, including Mortgage Choice and Connective, and major banks through their broker networks.

There are fears that the status of existing deals – which used the deposit bonds as a form of bridging finance for up to 48 months – could be jeopardised by the collapse of the insurance company.

Sale 'complications'

Worried mortgage brokers, who recommended the products to clients, are seeking advice on whether clients need to buy other cover, or secure additional or replacement financial risk bonds. It could mean unspecified risks, uncertainty and deal delays for tens of thousands of counter parties, financiers and their representatives, including lawyers and other brokers.

Deposit Power is on the product panel of most of the leading mortgage brokerages and aggregators, which is typically considering a guarantee of quality and service.

Administrator's Chifley Advisory is warning there are potential buyers but that the deal will need to "happen quickly, or it will not happen".

It also warns the "sale has its complications".

CBL has not been in contact with Chifley Advisory since February 28, or provided explanations about the delay, which is frustrating attempts to sell the local company. .

"It is unclear as to what it is doing because there has been very little official communication," said Henry Kwok, a Chifley administrator said. "We have been involved in general discussions but the question for the market is what will happen to the bonds."

Quick access to funding

Mortgage brokers, who act as an intermediary between borrowers and lenders, are being warned the status of existing loan guarantees is unknown, pending applications will not be processed and no payments have been taken.

Investors calling the Sydney-based office are being answered by a recorded message the company is facing "external issues" and that it is unable to process any deals.

Deposit Power's bonds were sold to individuals, first time buyers, retirees, self-employed borrowers, trusts, corporate entities, or self managed super funds purchasing commercial or residential property. It was established in 2012 and regulated by the Australian Securities and Investments Commission.

They were also heavily marketed to first time and off the plan property investors. A deposit guarantee is an alternative method of placing a deposit on a property. It is touted as an option for buyers that don't, or can't, use cash for a deposit, often because they are waiting for a settlement, have invested in a fixed term deposit, or a waiting for investments to mature.

The product is a form of insurance that 'guarantees' the deposit will be paid. The property buyer provides a guarantee certificate to the sellers' representative until settlement, which can typically range from six to 48 months. They have been particularly popular in Sydney and Melbourne's bull property markets were buyers needed to move quickly and juggle their cash reserves.

Mortgage brokers use them as an alternative to potentially more expensive lender bridging finance, particularly for first time home buyers eligible for a state government grant after settlement.

Investors of residential and commercial property borrowing 80 to 100 per cent of the purchase price needing quick access to funding also use them, particularly where they need time to access equity, or sell other investments to raise funds for a deposit.

CBL in interim liquidation

Mr Kwok and Gavin Moss of Chifley Advisory have been appointed as joint administrators.

Deposit Power was an authorised manager for CBL Insurance and provider of its deposit bonds. "All deposit guarantee bonds were issued by CBL Insurance and CBL Insurance is liable to pay any valid claims payable to any beneficiary of any guarantee issued by them," according to a statement from Chifley Advisory. "The company (Deposit Power) was not the issuer of any deposit guarantees," it adds.

"There is an interested party that may purchase the business of the company, but the sale has its complications as it was only an agent/authorised manager of CBL Insurance.

Given the nature of the company's operation, any sale transaction will need to happen quickly, or it will not happen at all," it warns. The New Zealand High Court last month ordered CBL Insurance be placed in interim liquidation on an application by the Reserve Bank of New Zealand as the insurer's prudential supervisor. In New Zealand, liquidators are warning those insured by CBL, or any beneficiaries of its policies, to seek advice on whether they need to buy other cover or secure additional, or replacement financial risk bonds.

Representatives for CBL were not available for comment.

Aggregators, who act as intermediaries between lenders and brokers, had Deposit Power as 'panel partners". Aggregators enter into contractual relationships with multiple lenders, and those lenders form the aggretator's "panel. Commissions on successful loans are paid by lenders and suppliers to aggregators who take a fee before passing on the remainder to brokers. Many aggregators are owned by lenders, particularly CBA and National Australia Bank.

http://www.afr.com/personal-finance/10000-property-buyers-caught-in-deposit-power-collapse-20180306-h0x460

As the number of people harmed by this grows, the amount of time it took the RBNZ to act becomes increasingly questionable. Perhaps when there is cause for concern a regulator needs to resolve that concern to their satisfaction before they allow the company they regulate to continue on creating more and more collateral damage?

[iceman]

What a total mess and I bet we haven't seen half of it yet !
Makes me even more determined to stay away from investing in insurance companies

[hardt]

From the article - https://www.interest.co.nz/opinion/92501/david-hargreaves-says-cbl-disaster-appears-have-revealed-massive-loopholes-our

FMA in response to his query

“Prior to 2 February 2018, although the FMA was aware of the RBNZ’s concerns, the information was in dispute between CBL and RBNZ. During this period there was insufficient information to be able to contradict CBL’s assessment of its financial position. The purpose of the RBNZ engagement was to substantiate the information being provided by CBL. The FMA engaged with NZX Regulation, who engaged with CBL during this period and CBL confirmed to NZX Regulation that it was in compliance with its continuous disclosure obligations.

"The fact that a listed issuer is engaging with a regulator is not necessarily material information in itself. The materiality of the information depends upon the nature and likely outcomes of that engagement.

What exactly is the FMA obligated to do for the market in NZ?

[bull....]

From the article - https://www.interest.co.nz/opinion/92501/david-hargreaves-says-cbl-disaster-appears-have-revealed-massive-loopholes-our

FMA in response to his query

“Prior to 2 February 2018, although the FMA was aware of the RBNZ’s concerns, the information was in dispute between CBL and RBNZ. During this period there was insufficient information to be able to contradict CBL’s assessment of its financial position. The purpose of the RBNZ engagement was to substantiate the information being provided by CBL. The FMA engaged with NZX Regulation, who engaged with CBL during this period and CBL confirmed to NZX Regulation that it was in compliance with its continuous disclosure obligations.

"The fact that a listed issuer is engaging with a regulator is not necessarily material information in itself. The materiality of the information depends upon the nature and likely outcomes of that engagement.

What exactly is the FMA obligated to do for the market in NZ?


The FMA will be using all of its new powers – including licensing, supervision, compliance, and enforcement – to react to potential harms that may arise in the markets. ........ The FMA would continue to intervene to prevent poor quality outcomes for consumers and investors.

https://fma.govt.nz/news-and-resources/media-releases/fma-focus-on-improving-conduct-and-increasing-trust-in-financial-markets/

on there page what they do ............ guess this time the outcome is not so good for consumers and investors

[minimoke]

on there page what they do ............ guess this time the outcome is not so good for consumers and investorsUnless the calculated potential outcome wasnt a high enough threshold

[Balance]

CBL Corp managing director Peter Harris has said there was a wider story to be told about how CBL got to where it is and where it might be heading. "The facts will show some mistakes we have made, and the cause and effect of those, and just where we are and why, along with our plan for dealing with these issues."

Behind the paywall on NBR today a title reads "more than $600M seen wiped off CBL equity."

Wider story to be told?

Start by telling why CBL went against RBNZ's statutory direction NOT to transfer or pay any more money/funds overseas - $55m worth.

Something smells and smells very very badly.

[Balance]

From the article - https://www.interest.co.nz/opinion/92501/david-hargreaves-says-cbl-disaster-appears-have-revealed-massive-loopholes-our

FMA in response to his query

“Prior to 2 February 2018, although the FMA was aware of the RBNZ’s concerns, the information was in dispute between CBL and RBNZ. During this period there was insufficient information to be able to contradict CBL’s assessment of its financial position. The purpose of the RBNZ engagement was to substantiate the information being provided by CBL. The FMA engaged with NZX Regulation, who engaged with CBL during this period and CBL confirmed to NZX Regulation that it was in compliance with its continuous disclosure obligations.

"The fact that a listed issuer is engaging with a regulator is not necessarily material information in itself. The materiality of the information depends upon the nature and likely outcomes of that engagement.

What exactly is the FMA obligated to do for the market in NZ?

https://www.rbnz.govt.nz/-/media/ReserveBank/Files/News/2018/Reserve-Bank-affidavit-to-the-High-Court-re-CBL-Insurance.pdf?la=en

Pages 7 to 9 reveals very clearly the major developments with this sorry saga :

1. July 2017 - RBNZ directed CBL to increased its solvency ratio to 170%.
2. August 2017 - CBL and its actuarial rejected RBNZ's concerns.
3. 15 November 2017, CBL accepts RBNZ's concerns and findings.

Meanwhile, some of the entities CBL dealt with overseas like Elite and Alpha were failing and falling like ten pins over that period - and references made to doubts about CBL's solvency!!!!!!!

FMA and NZ Regulation can state and say whatever they want BUT the fact remains that they should have taken action in November 2017 and informed the market.

Materiality - wat der fak! The fact that CBL is now buggered puts a lie to what the FMA believes or believed. Big Fat Fail.

[horus1]

There is a case for a class action against the Co and directors ,surely.

[minimoke]

The FMA will be using all of its new powers – including licensing, supervision, compliance, and enforcement – to react to potential harms that may arise in the markets. ........ The FMA would continue to intervene to prevent poor quality outcomes for consumers and investors.

https://fma.govt.nz/news-and-resources/media-releases/fma-focus-on-improving-conduct-and-increasing-trust-in-financial-markets/

on there page what they do ............ guess this time the outcome is not so good for consumers and investorsGiven the number of complaints and unhappy punters you might find the FMA is knees deep in checking out Cryptopia, the christchurch based Cryptocurrency exchange.

[Balance]

There is a case for a class action against the Co and directors ,surely.

http://www.afr.com/business/insurance/insurance-brokers/aussie-finance-company-assetinsure-caught-in-cbl-collapse-fall-out-20180307-h0x6px

CBL's Oz 100% subsidiary Assetinsure) plots independent path away from parent company and its very telling that Assetinsure executives are scathing about how the whole situation is being handled.

"The fact some children are behaving badly does not affect the other grown up kids," Assetinsure chief executive Gregor Pfitzer​ said about his company's relationship with other companies in the group. "Cleary, we have an interest in distancing ourselves from the overall environment," Mr Pfitzer said.

[macduffy]

Unfortunately, these "children", as subsidiaries of CBL, are all dependents of their parent - not "grown-up" and independent.

[Balance]

Unfortunately, these "children", as subsidiaries of CBL, are all dependents of their parent - not "grown-up" and independent.

This guy is talking about using private equity and other equity providers to take out CBL. Fascinating turnaround as they sold Assetinsure to CBL in 2015 in the first place!

Bring a personnel driven business, there is no goodwill left if the staff all leave en masse.

[Brain]

New Zealand Shareholders Association have just sent out an email to their members asking for information about holdings in CBL and the purchase date of the shares. I hope that all readers and contributors to share trader are members of the NZSA.

[horus1]

I am .Dont hold CBL ,always to dodgy. Where wqere the directors. This reads like Fletchers. You need experienced people on boards, the NZ Directors rules training directors etc are too theoretical.

[trader_jackson]

I am .Dont hold CBL ,always to dodgy. Where wqere the directors. This reads like Fletchers. You need experienced people on boards, the NZ Directors rules training directors etc are too theoretical.

This does not read like Fletchers, this reads far far worse!

[RRR]

Does any one remember Peter Harris speaking at NZSHA annual conference in Auckland 2 years ago? He told a story about insuring a mine operation in south america..He also said most of his time was spent travelling around the globe. I thought he was dodgy and thank god I stayed away. Business was too complex to understand..

[Balance]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12009623

RBNZ defends its CBL Confidentiality Call.

[BlackPeter]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12009623

RBNZ defends its CBL Confidentiality Call.

Today's interview with the RBNZ deputy governor Geoff Bascand about CBL board and management quite telling as well: "it is hard to deal with any entity that choose to disobey the law"

https://www.radionz.co.nz/national/programmes/businessnews/audio/2018635657/business-news-for-12-march-2018

Interesting appraisal of the CBL board. He must be pretty certain of his position.

[Balance]

Today's interview with the RBNZ deputy governor Geoff Bascand about CBL board and management quite telling as well: "it is hard to deal with any entity that choose to disobey the law"

https://www.radionz.co.nz/national/programmes/businessnews/audio/2018635657/business-news-for-12-march-2018

Interesting appraisal of the CBL board. He must be pretty certain of his position.

Class action surely must be considered or under consideration.

[hardt]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12009623

RBNZ defends its CBL Confidentiality Call.

And OF COURSE Bascand could not pass the opportunity to ask for more funding...

Would a larger office and more subordinates for Bascand have changed the outcome and oversight of CBL?... think not.

EDIT - just looking at this dudes dopey face makes me want to punch my screen in.

[Balance]

And OF COURSE Bascand could not pass the opportunity to ask for more funding...

Would a larger office and more subordinates for Bascand have changed the outcome and oversight of CBL?... think not.

EDIT - just looking at this dudes dopey face makes me want to punch my screen in.

Have a heart - probably been having sleepless nights overseeing CBL.

To be fair, it is HARD to deal with any entity which chooses to disobey the law, regulation and instructions - especially when the RBNZ is sgown again to have little teeth to deal with such delinquencies.

Imagine having to apply to the court before action can be taken!

[Dust]

Have a heart - probably been having sleepless nights overseeing CBL.

To be fair, it is HARD to deal with any entity which chooses to disobey the law, regulation and instructions - especially when the RBNZ is sgown again to have little teeth to deal with such delinquencies.

Imagine having to apply to the court before action can be taken!

Thats no excuse for not implenting controls though....If I have to ring up the bank just to up a 10k payment limit, surely they should have the power to gatekeep 50mil. The financial regulatory system in nz is just a burdensome mess

[hardt]

Have a heart - probably been having sleepless nights overseeing CBL.

To be fair, it is HARD to deal with any entity which chooses to disobey the law, regulation and instructions - especially when the RBNZ is sgown again to have little teeth to deal with such delinquencies.

Imagine having to apply to the court before action can be taken!

No job is easy and by no means do I believe RBNZ should take the blame for what CBL has done.

I do think, when it was apparent CBL was not co-operating, RBNZ and FMA through should have disclosed something... anything to the world to say.
"hey look, they aren't listening to us"... we found out almost a year later with no course for getting out.

Bad look for NZ, markets and insurance industry.

[Bear_me_out]

Some brief comments..........
The RBNZ does have teeth to deal with delinquencies
When its concerns were raised by the events at Elite in 2017, it placed a significant additional capital requirement on CBL (170% solvency)
The RBNZ's concerns over reserving were clearly resisted by the CBL, and also (somewhat surprising) resisted by its actuaries PriceWaterhouseCoopers (aren't we supposed to be able to rely on the work that actuaries do?)
When CBL and its actuaries finally admitted there was a reserving problem in Nov 2017, the RBNZ slapped a ban on this proposed reinsurance reserve transfer, while it waited to see if CBL would raise the capital needed to meet its 170% requirement.
When CBL defied the RBNZ and went ahead with the transfer, the RBNZ took them to court and successfully had them placed in interim liquidation in February 2018.
In the circumstances, and from the information available (more to come no doubt), to me this points to a relatively diligent time-frame of action by the RBNZ. I think that aggrieved shareholders (and possibly aggrieved policyholders, but we don't know yet whether the Company has enough assets to pay claims), don't have to look further than the CBL Board and Management, and CBL's "expert" advisers, for the reasons for their dramatic erosion (loss?) of capital.

[Balance]

https://www.radionz.co.nz/news/business/352446/ireland-s-central-bank-being-blamed-for-cbl-s-woes

'Growing too fast and with too few controls' - give a kid a V8 and waytch what happens.

[Balance]

http://www.sharechat.co.nz/article/e7236942/fma-rejected-2015-complaint-cbl-prospectus-included-blatant-lie-emails-show.html

FMA ignored and rejected complaints about CBL prospectus - including statement that it contained a blatant lie.

Asleep at the wheels - that's the FMA.

Good at the bottom of the cliff playing the soulful violin though.

[Balance]

A collapse like CBL (& Feltex & Credit Sails & Wynyard) can deliver valuable lessons for investors.

Biggest lesson : Anyone who trusts any due diligence done by the promoters Forsyth Barr and UBS, vetted by the equally incompetent FMA, is better off to donate their hard earned money to Destiny Church for salvation.

[bull....]

http://www.sharechat.co.nz/article/e7236942/fma-rejected-2015-complaint-cbl-prospectus-included-blatant-lie-emails-show.html

FMA ignored and rejected complaints about CBL prospectus - including statement that it contained a blatant lie.

Asleep at the wheels - that's the FMA.

Good at the bottom of the cliff playing the soulful violin though.

huge revelation , actually i dont recall hearing about these concerns at the time of the ipo?

[Balance]

huge revelation , actually i dont recall hearing about these concerns at the time of the ipo?

CBL and its promoters would have had an expensive team of lawyers to stare down the FMA bullies.

That's the evidence to date of how the FMA works.

[RupertBear]

A collapse like CBL (& Feltex & Credit Sails & Wynyard) can deliver valuable lessons for investors.

Biggest lesson : Anyone who trusts any due diligence done by the promoters Forsyth Barr and UBS, vetted by the equally incompetent FMA, is better off to donate their hard earned money to Destiny Church for salvation.

Yep I learned a few valuable lessons from investing in Wynyard. I was reassured that Milford owned a huge amount and I was reassured by Sam Morgan investing in them. Big mistake. I also ignored many many comments on here warning they were in trouble and encouraging people to get out. I didnt listen. Another big mistake. I also held on during a very big sustained down trend hoping for the best. Infact I stupidly bought more thinking I would be onto a winner when it turned around. Big mistake.

With Wynyard it was easy for most of you to see it was going under. I lost money because I made a stupid investment and ignored the warning signs. With CBL you guys had the rug pulled out from under you without any warning. That is a way worse outcome and I feel truely sorry for people who have lost money on this train wreck.

[Balance]

Yep I learned a few valuable lessons from investing in Wynyard. I was reassured that Milford owned a huge amount and I was reassured by Sam Morgan investing in them. Big mistake. I also ignored many many comments on here warning they were in trouble and encouraging people to get out. I didnt listen. Another big mistake. I also held on during a very big sustained down trend hoping for the best. Infact I stupidly bought more thinking I would be onto a winner when it turned around. Big mistake.

With Wynyard it was easy for most of you to see it was going under. I lost money because I made a stupid investment and ignored the warning signs. With CBL you guys had the rug pulled out from under you without any warning. That is a way worse outcome and I feel truely sorry for people who have lost money on this train wreck.

https://www.intelligentinvestor.com.au/how-cbl-went-bust-in-a-month-1887231

Some good thoughts to apply in future :

The nature of insurance makes it a difficult area for investors.

It’s hard to assess management on its appreciation and management of risk.

A track record of managing through insurance cycles, supported by the appropriate business capabilities and a robust balance sheet, certainly helps.

As for management’s skin in the game, well, that only helps if it understands the game. In CBL’s case, it clearly didn’t.

In an amusing side-note, CBL's managing director was even crowned New Zealand's entrepreneur of the year by EY last year. It all goes to show that there's no substitute for independent research.

The fallout from CBL’s failure is still to be fully realised. But the lessons for investors are much clearer.

[Leftfield]

This article is an interesting read, as is the idea of many shareholders using the small claims court to chase a company (such as CBL) to remedy any 'alleged losses/neglect/illegal issues' etc.

Here's the link (https://www.inc.com/bill-murphy-jr/people-are-suing-equifax-in-small-claims-court-its-totally-brilliant-heres-why.html)

(Disc not holding CBL - DYOR)

[macduffy]

This article is an interesting read, as is the idea of many shareholders using the small claims court to chase a company (such as CBL) to remedy any 'alleged losses/neglect/illegal issues' etc.

Here's the link (https://www.inc.com/bill-murphy-jr/people-are-suing-equifax-in-small-claims-court-its-totally-brilliant-heres-why.html)

(Disc not holding CBL - DYOR)

Yes, it may work if the target has any/sufficient cash - or directors' liability insurance.

[BlackPeter]

Interesting to note that NZEY (the guys and gals who roll the dice for the worlds most prestigious business award - their words, not mine) webpage still feature Peter Harris' smiley face (or is he grinning?):

http://www.ey.com/nz/en/about-us/entrepreneurship/entrepreneur-of-the-year/eoy_overview

9562

"Meet the entrepreneur of the year 2017!" - What an amazing person he must be ...

Not sure who would want to follow him in receiving this amazing honor, but what I am wondering is ...

Peter Harris received this award in late September 2017, and this must have been when they took his photo.

What a smile!

How could he muster this sunny smile knowing that his company is in that much trouble? The confidential talks with the RBNZ started at least 2 months before him accepting this award. He must have known at that stage that his companies customers and shareholders are in a deep brown mess ...

The only words I can find in describing this behavior might be unsuitable for publication. Any ideas?

[Brain]

To have Peter Harris’s smile face still on their website just shows how totally out of control ey are.
Do these people have no shame. Why would anybody deal with these people. They clearly have no idea how to run a business.

[BlackPeter]

And we probably should give Peter Harris an opportunity to comment on his award ... here is what he had to say:

9563

"... teamwork, humility, empathy ..."

Always finding the right words ... just wondering why he is so quiet these days? He is not even responding to (polite) emails of concerned investors (I tried) ...?

[Hectorplains]

This article is an interesting read, as is the idea of many shareholders using the small claims court to chase a company (such as CBL) to remedy any 'alleged losses/neglect/illegal issues' etc.

Here's the link (https://www.inc.com/bill-murphy-jr/people-are-suing-equifax-in-small-claims-court-its-totally-brilliant-heres-why.html)

(Disc not holding CBL - DYOR)

US article. Nice idea but small claims here is called the Disputes Tribunal - and it doesn't fit their jurisdiction - https://www.disputestribunal.govt.nz/can-help-with/#can

[hardt]

Despite what has come to light after the award, here is a man who has/had been very successful in launching this business into a $700m machine over his time at CBL.

Similar to the market, how are EY to know of the undisclosed?

Once in a while, "legends" fall.

[BlackPeter]

Despite what has come to light after the award, here is a man who has/had been very successful in launching this business into a $700m machine over his time at CBL.

Similar to the market, how are EY to know of the undisclosed?

Once in a while, "legends" fall.

Sure, but a real legend does not accept an award (s)he knows they don't deserve - and hey, he was much faster to destroy these $700m machine than creating it - wasn't he?

He must have known at the time he accepted the award that his entrepreneurial work is already down the drain ... and he still smiled for the photographer, unless he is an incredible clueless legend ...

This was 2 months into the (confidential) talks with the RBNZ. Are you saying that the CEO had at that stage still no clue that the reserves are insufficient and his company most likely broke? What a legend ...

Wouldn't it have been the honorable thing to decline the award and put his bandwidth instead into fighting for his clients and investors - and at least avoiding further damage by following the laws and regulations?

[hardt]

Sure, but a real legend does not accept an award (s)he knows they don't deserve - and hey, he was much faster to destroy these $700m machine than creating it - wasn't he?

He must have known at the time he accepted the award that his entrepreneurial work is already down the drain ... and he still smiled for the photographer, unless he is an incredible clueless legend ...

This was 2 months into the (confidential) talks with the RBNZ. Are you saying that the CEO had at that stage still no clue that the reserves are insufficient and his company most likely broke? What a legend ...

Wouldn't it have been the honorable thing to decline the award and put his bandwidth instead into fighting for his clients and investors - and at least avoiding further damage by following the laws and regulations?

They were still in dispute with RBNZ about the solvency call at the time...

He has the confidence of a man that grew the business at 37% CAGR over the last 17 years.
Over his time with the company he has probably faced a regulator or two... don't you think he could have put the blinders up after many years of the same old thing.

Don't mistake my comments for a commendation of Peter Harris at this current point in time, merely an observation.

[Brain]

Sure, but a real legend does not accept an award (s)he knows they don't deserve - and hey, he was much faster to destroy these $700m machine than creating it - wasn't he?

He must have known at the time he accepted the award that his entrepreneurial work is already down the drain ... and he still smiled for the photographer, unless he is an incredible clueless legend ...

This was 2 months into the (confidential) talks with the RBNZ. Are you saying that the CEO had at that stage still no clue that the reserves are insufficient and his company most likely broke? What a legend ...

Wouldn't it have been the honorable thing to decline the award and put his bandwidth instead into fighting for his clients and investors - and at least avoiding further damage by following the laws and regulations?


You have said it all Black Pete. I have no words to describe Harris’s behaviour.

[percy]

www.chrislee.co.nz has plenty to say in today's Taking Stock.

[Lola]

www.chrislee.co.nz (http://www.chrislee.co.nz) has plenty to say in today's Taking Stock.

When doesnt he? And always with hindsight. In this latest ramble he flogs the old SCF horse again. Boring. But he was the first to " Stand Tall " , as he described himself, when he supported Alan Hubbard in the first days of the Provincial collapse. What has happened by the way to his Court actions vis a vis SCF? Deep pockets not so deep?

As already observed CBL red light went on when two promotors sold shares in April 2017 only a few hours after they came out of escrow. But where was Lee then? Reading FNZC research maybe.

BTW Mr Harris was "Young Entrepreneur of the Year" way back in 1986 or thereabouts.

[hardt]

When doesnt he? And always with hindsight. In this latest ramble he flogs the old SCF horse again. Boring. But he was the first to " Stand Tall " , as he described himself, when he supported Alan Hubbard in the first days of the Provincial collapse. What has happened by the way to his Court actions vis a vis SCF? Deep pockets not so deep?

As already observed CBL red light went on when two promotors sold shares in April 2017 only a few hours after they came out of escrow. But where was Lee then? Reading FNZC research maybe.

BTW Mr Harris was "Young Entrepreneur of the Year" way back in 1986 or thereabouts.

Directors often sell shares once out of escrow, they still held onto 90% of their holding and just under half of it all... how was that the red light?

[Lola]

Directors often sell shares once out of escrow, they still held onto 90% of their holding and just under half of it all... how was that the red light?

Well ok maybe not a full on red light but a full on deep and bright orange one though. Plenty of examples....OHE, even NZX dyor

[horus1]

I think Lee is dead right. CBL directors should be in jail.

[minimoke]

I think Lee is dead right. CBL directors should be in jail.Lee is a charlatan who hopes our memories fade. But some of us remember ""There are some companies that are unarguably good - Marac, Strategic, St Laurence, South Canterbury and UDC." he said (Dont ask him about his Finance Company rating system which mysteriously disappeared during the GFC)

[blackcap]

Lee is a charlatan who hopes our memories fade. But some of us remember ""There are some companies that are unarguably good - Marac, Strategic, St Laurence, South Canterbury and UDC." he said (Dont ask him about his Finance Company rating system which mysteriously disappeared during the GFC)

Ah yes the famous rating system. I wonder how much money his clients lost during the GFC. He was heavy in promoting Finance Companies, I guess they did provide nice trail income and good brokerage......
Charlatan may be a bit far but misguided, and naive could be apt descriptions. I mean he did go and visit the finance companies so I am not calling him lazy when coming up with the rating system. Maybe too eager to believe. And to be fair he never did think Bridgecorp was a good investmen :)

[gbogo]

... But where was Lee then? Reading FNZC research maybe.



Lee lauds FNZC fairly regularly as an upstanding firm committed to research etc. (I am a happy client of theirs) But is it widely known that his son is the FNZC CEO now?

[percy]

It is near impossible to make sound investment decisions based on lies.
IQE.asx and nzx.Total lies.
BIG,asx Cash flow lies.
RFG.asx lies.
CBL.asx and nzx.Total lies.
TGH and MPG.For fear of being sued.No comment.
NZ Finance companies including Dominion,total lies or incompetence.[FPH and UDC were sound].

[percy]

Lee lauds FNZC fairly regularly as an upstanding firm committed to research etc. (I am a happy client of theirs) But is it widely known that his son is the FNZC CEO now?

I find NZFC's research the best.

[BlackPeter]

Lee is a charlatan who hopes our memories fade.
...


charlatan ˈʃɑːlət(ə)n noun a person falsely claiming to have a special knowledge or skill.

Not sure this is a fair comment.

I think his advise on portfolio management is sound. His recommendations on particular stocks are - as everybody else's - sometimes right and sometimes wrong. I made some money following his advise, and I lost some as well (CBL included). However - I have never heard him claiming that he is always right or that he has a special skill in identifying winners.

It might be a fair discussion (but not for this thread) on whether he (or brokers / analysts in general) do add value, and I think the answer is "it depends". If you use their skills in an appropriate way and know how to live with uncertainty, than I think he (and others) do add in many cases value. If you use them however just as "oracle", "crystal ball" or stock pickers, than you might be out of luck.

[minimoke]

Charlatan may be a bit far I may be a bit unkind there. But now I'm forced to think on a continuum where I would place him and where I would place Doug Somers-Edgar

[Balance]

I may be a bit unkind there. But now I'm forced to think on a continuum where I would place him and where I would place Doug Somers-Edgar

This article in the Sunday Star Times gives a good insight into the advice given on finance companies by Chris Lee. Have a read of this :

http://www.stuff.co.nz/business/pers...-and-adversity

Excerpts :

"In March 2006 Lee invested the Lindsays' money in Hanover Capital, but in October the next year he withdrew support for the company and wrote in his public blog: "Mark Hotchin and Eric Watson are not bankers, and not the sort of people one would regard as low-risk conservatives." Good one.

"In a letter to the couple in early February, Lee said: "Never did I make your decisions. Not once have I contacted you, or any client seeking to persuade you to invest money in anything. Never have I invested your money for you. You invested your money." Another good one.

[Edited by Moderator: Quoting large sections of articles is not good]

[Bear_me_out]

I may be a bit unkind there. But now I'm forced to think on a continuum where I would place him and where I would place Doug Somers-Edgar


Personally the only share analysis I pay attention to comes from Mint or AMP, the rest of them don't seem to have the rigours and depth required in my view. The Macquarie team in Sydney is quite good too, and correctly picked CBL for what it was ages ago. Commercial property = AMP, Fixed interest = Nikko, and that's about it I think.

Insurance is a particularly tricky area too, so it does need true expertise to assess -
(a) Life insurance accounting is quite complex, because of the enormous up-front commissions that they pay, and how profit is reported. Bit of a black hole forever putting more money in to pay commissions, than can be taken out as dividends.
(b) Short-tail general insurance (house, contents, motor) should be much more straightforward because it is much more a cash-in, cash-out business, and claim reserves are usually quite simple, but the Canterbury earthquakes taught everyone a lesson that even short-tail insurance can be problematic. Most insurers blew their catastrophe reinsurance limits, and claim provisions are still going up even with the best engineering advice that policyholder money can buy, as the long-suffering shareholders of Tower will know.
(c) Long-tail general insurance is, and always will be, a nightmare, e.g. asbestos risks in Australia. Getting into long-tail insurance business in a big way, in a foreign market, without apparently understanding the business, as seems to be the case with CBL, particularly difficult to assess. If CBL's Board, managers, and external "expert" advisers didn't fully understand it, then external analysts and investors would have needed exceptional insight to assess the true position.

[hardt]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12014245

Bryan Gaynor - " The CBL Insurance debacle raises serious questions about the Reserve Bank's ability to effectively execute its regulatory obligations. A major bank failure, which is highly unlikely but does happen occasionally, would put the Reserve Bank under enormous pressure. Recent comments from a senior Reserve Bank employee indicate that the regulator doesn't believe that keeping share market investors fully informed is one of its objectives. This attitude would be a disaster if one of the major Australian owned domestic banks had problems in New Zealand. "

[Marilyn Munroe]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12014245

Bryan Gaynor - " Recent comments from a senior Reserve Bank employee indicate that the regulator doesn't believe that keeping share market investors fully informed is one of its objectives. This attitude would be a disaster if one of the major Australian owned domestic banks had problems in New Zealand. "

It would be unlikely for Reserve Bank to make a public statement saying things at a major trading bank were sticky, because this would set off a stampede of withdrawls.

The Reserve Bank is not your friend, its function is to protect the banks and the system of which they are a key part.

Suggestions: If you are an unsecured bank creditor(have money on deposit) spread it around. Unless you are a supplicant for the issue of credit do you really need to have your business, personal, credit cards or retirement funds at the same bank.

Remember if there is the smell of danger in the air those that panic first come off best.

Boop boop de do
Marilyn

[Balance]

Headline in NBR this morning - CBL : The French Connection. Inurance Group's bosses owned personal stakes in SFS two years before its $110m acquisition.

Smells bad!

SFS acquired in November 2016 and in less than 8 months, SFS is already in trouble.

[BlackPeter]

Watershed report to be released by May 11 ...

https://www.nzx.com/announcements/315960

One thing is sure - and that's the administrators fees; And this is on top of management salaries (they are nicely paid for running the company down) and probably board fees ... :t_down:

[Beagle]

Extremely unlikely shareholders will ever see even a single cent per share.

[BlackPeter]

Extremely unlikely shareholders will ever see even a single cent per share.

Agree - and I sort of moved on (ATM, SML, SUM and some others currently working in overdrive to recover my losses ;));

However - it looks every week more likely that something fishy was going on (Thanks, balance, for the latest pointer). I definitely hope that they use this time not just the wet bus ticket approach to punish the responsible bunch.

[Balance]

Headline in NBR this morning - CBL : The French Connection. Inurance Group's bosses owned personal stakes in SFS two years before its $110m acquisition.

Smells bad!

SFS acquired in November 2016 and in less than 8 months, SFS is already in trouble.

I stand corrected!

https://stocknessmonster.com/announcements/cbl.asx-2A992879/

$150m acquisition and deal was completed and CBL took control in January 2017!

https://www.insurancetimes.co.uk/capital-solvency-probably-less-than-zero--regulator-shock-findings-on-cbl-insurance-/1426534.article

RBNZ assessed CBL's capital solvency in July 2017 and found CBL to have severely under-reserved its French business so that the ratio was less than ZERO (0)!!!!!

So in half a year after acquisition, SFS was insolvent!

[peat]

GS wont come cheap

a consultants feeding frenzy

[Balance]

GS wont come cheap

a consultants feeding frenzy

$100m raised at IPO, $63m raised to purchase SFS and $60m placed by Peter Harris & others to enhance stock liquidity - $223m into thin air!

Meanwhile, the promoters, lawyers, accountants and consultants gouge themselves senseless on fees.

Something wrong with the picture here!

[BlackPeter]

I stand corrected!

https://stocknessmonster.com/announcements/cbl.asx-2A992879/

$150m acquisition and deal was completed and CBL took control in January 2017!

https://www.insurancetimes.co.uk/capital-solvency-probably-less-than-zero--regulator-shock-findings-on-cbl-insurance-/1426534.article

RBNZ assessed CBL's capital solvency in July 2017 and found CBL to have severely under-reserved its French business so that the ratio was less than ZERO (0)!!!!!

So in half a year after acquisition, SFS was insolvent!

They must have done a hell of due diligence - but I suppose Peter was too busy to compete for his "entrepreneur of the year 2017" award. Hey, certainly - he couldn't be everywhere ...

[kizame]

Luckily charting and TA keep traders out of these horrible nightmares,but I am very sorry for anyone whom loses money in these situations.

[BlackPeter]

Luckily charting and TA keep traders out of these horrible nightmares,but I am very sorry for anyone whom loses money in these situations.

How so? While they had in September 2017 a dip below the MA 200 (I guess some people must have used their insider knowledge - will be interesting to see, who), their SP recovered since then - and actually was (depending on whether you use MA or EMA and your data provider) above the MA 200 when they went into the trading halt they never came out of.

I am not sure how charting can protect you against blatant but hidden incompetence on board level - and it would not protect you against crooks and liars either (I hope we find out which one of these options it was), unless somebody is leaking as well ;);

[King1212]

$100m raised at IPO, $63m raised to purchase SFS and $60m placed by Peter Harris & others to enhance stock liquidity - $223m into thin air!

Meanwhile, the promoters, lawyers, accountants and consultants gouge themselves senseless on fees.

Something wrong with the picture here!

not fair eh...but well life is never fair....people needs to be aware....this is stock market..where a fortune can be turn into something worthless overnight....

[kizame]

How so? While they had in September 2017 a dip below the MA 200 (I guess some people must have used their insider knowledge - will be interesting to see, who), their SP recovered since then - and actually was (depending on whether you use MA or EMA and your data provider) above the MA 200 when they went into the trading halt they never came out of.

I am not sure how charting can protect you against blatant but hidden incompetence on board level - and it would not protect you against crooks and liars either (I hope we find out which one of these options it was), unless somebody is leaking as well ;);

All I can say is I've traded this one in the past,and hadn't touched it in a while cos it just didn't look good to me. I have deleted the chart from my platform so can't go into specifics anymore.
Being above a 200 day ma for me isn't good enough, a stock has to be trending consistently and tick other boxes as well,this one didn't later in it's life.

Ok so just had a look at the chart on ANZ sec. and assending triangle at the end looked promising,but divergence on the MACD said no-way would I touch it.

[BlackPeter]

not fair eh...but well life is never fair....people needs to be aware....this is stock market..where a fortune can be turn into something worthless overnight....

I don't think fairness is here the question. Pretty sure that a board needs more than just blatant incompetency to create such a mess in such a short time. Interesting as well that members of the board sold many millions of shares at full price (i.e. without disclosing any trouble) only months before even third parties (RBNZ) got wind of their financial issues.

This stinks, and I don't think that any investor should get used to this stench. We do pay our taxes to have regulatory bodies, police and prisons to keep the system for us clean. They better do their work.

[trader_jackson]

This stinks, and I don't think that any investor should get used to this stench. We do pay our taxes to have regulatory bodies, police and prisons to keep the system for us clean. They better do their work.

But the RBNZ has already said its not up to them to make sure a listed company (and one in the top 50) stays on top of their disclosure obligations so they have washed their hands of any part to play
Don't know how they could make such a statement but they have... and they should not be the regulator if they don't care what the company is or isn't saying to the market

[BlackPeter]

But the RBNZ has already said its not up to them to make sure a listed company (and one in the top 50) stays on top of their disclosure obligations so they have washed their hands of any part to play
Don't know how they could make such a statement but they have... and they should not be the regulator if they don't care what the company is or isn't saying to the market

Not sure about the RBNZ - they might have felt to be between a rock and a hard place, but certainly didn't gain a lot of respect with their stance. I suspect however for sorting out the CBL mess we will anyway need the SFO;

Really curious about the excuses of the CBL board (hopefully at court) for not just forgetting to disclose this very material detail, but for making obviously untrue disclosures "For the purposes of ASX Listing Rule 1.15.3, CBL Corporation Limited confirms that it continues to comply with the NZX Listing Rules."

One of these listing rules would have been the continuous disclosure rule ... and I don't really think they can hide behind the confidentiality exclusion (which is supposed to protect a third party, not the board for continuing to trade while knowing that the company is in trouble).

[Balance]

Not sure about the RBNZ - they might have felt to be between a rock and a hard place, but certainly didn't gain a lot of respect with their stance. I suspect however for sorting out the CBL mess we will anyway need the SFO;

Really curious about the excuses of the CBL board (hopefully at court) for not just forgetting to disclose this very material detail, but for making obviously untrue disclosures "For the purposes of ASX Listing Rule 1.15.3, CBL Corporation Limited confirms that it continues to comply with the NZX Listing Rules."

One of these listing rules would have been the continuous disclosure rule ... and I don't really think they can hide behind the confidentiality exclusion (which is supposed to protect a third party, not the board for continuing to trade while knowing that the company is in trouble).

Sadly, BP, CBL is no more so it will be a waste of time to pursue the company.

Why the regulations and laws must change to make directors personally liable - they get paid enough these days.

[BlackPeter]

Sadly, BP, CBL is no more so it will be a waste of time to pursue the company.

Why the regulations and laws must change to make directors personally liable - they get paid enough these days.

I agree that it should be easier to make directors personally liable. However - I don't see an investigation of the CBL mess as a "waste of time". While i agree that it won't return the shareholder funds this board wasted, it will - if the investigation results are acted upon - at least make sure that the next set of directors will think twice before creating a similar mess (lacking at this stage a better word). And sure - there is no point to chase the company, but there should be plenty of room to check whether the directors discharged their obligations re continuous disclosure, whether insider trading took place during the April 2017 share offering, to investigate who (and why) sold in September a larger position (pushing the SP below the MA200). It would be as well useful to understand who was involved in the not so "due diligence" before buying this French scorpion who's long tail was killing the company within a year. I guess - whoever did this must have been either highly incompetent (i.e. unsuitable to serve in any position of responsibility) or fraud was involved. Lack of competence or lack of character ;);

Do you really think an investigation would be a waste of time?

Look at our criminal justice system - nobody would say after a murder or manslaughter "given that the victim is anyway dead it is a waste of time to investigate the crime and catch and convict the offender". We actually put a lot of resources into catching, convicting and punishing murderers - and while this does not bring their victims back to live, this process still makes sure that our overall murder rate is much lower than in countries where they don't have this process.

Maybe we need to put more (and not less) effort into investigating company crashes - and properly deal with the people responsible.

[Balance]

I agree that it should be easier to make directors personally liable. However - I don't see an investigation of the CBL mess as a "waste of time". While i agree that it won't return the shareholder funds this board wasted, it will - if the investigation results are acted upon - at least make sure that the next set of directors will think twice before creating a similar mess (lacking at this stage a better word). And sure - there is no point to chase the company, but there should be plenty of room to check whether the directors discharged their obligations re continuous disclosure, whether insider trading took place during the April 2017 share offering, to investigate who (and why) sold in September a larger position (pushing the SP below the MA200). It would be as well useful to understand who was involved in the not so "due diligence" before buying this French scorpion who's long tail was killing the company within a year. I guess - whoever did this must have been either highly incompetent (i.e. unsuitable to serve in any position of responsibility) or fraud was involved. Lack of competence or lack of character ;);

Do you really think an investigation would be a waste of time?

Look at our criminal justice system - nobody would say after a murder or manslaughter "given that the victim is anyway dead it is a waste of time to investigate the crime and catch and convict the offender". We actually put a lot of resources into catching, convicting and punishing murderers - and while this does not bring their victims back to live, this process still makes sure that our overall murder rate is much lower than in countries where they don't have this process.

Maybe we need to put more (and not less) effort into investigating company crashes - and properly deal with the people responsible.

Agree with you re investigate for criminal negligence and breach of fiduciary duty - for sure.

Investigation of breach of continuous disclosure is a waste of time - the shareholders are the ones who pay the fines when the directors and management are found to be in breach, and in the case of a company like CBL, there's nothing to fine anyway?

[BlackPeter]

Agree with you re investigate for criminal negligence and breach of fiduciary duty - for sure.

Investigation of breach of continuous disclosure is a waste of time - the shareholders are the ones who pay the fines when the directors and management are found to be in breach, and in the case of a company like CBL, there's nothing to fine anyway?

Interesting - I guess there are a lot of shareholders who bought after the start of the RBNZ investigation, and still many who bought after the announcement that the company is fully compliant with the NZX rules.

Are you saying that the directors would not be personally liable for making untrue statements to the NZX if these statements cause investors to buy in reality worthless shares they otherwise would not have bought (as they did)?

I am no lawyer, but as a layman I'd think a fraud investigation would be in order.

[Balance]

Interesting - I guess there are a lot of shareholders who bought after the start of the RBNZ investigation, and still many who bought after the announcement that the company is fully compliant with the NZX rules.

Are you saying that the directors would not be personally liable for making untrue statements to the NZX if these statements cause investors to buy in reality worthless shares they otherwise would not have bought (as they did)?

I am no lawyer, but as a layman I'd think a fraud investigation would be in order.

That's my understanding - there was a big hue and cry when PEB was fined $500k for breach of continuous disclosure because the company (and so its shareholders) ended up paying the fine.

[kiora]

Hasn't Peter Harris got any of this left?
"$100m raised at IPO, $63m raised to purchase SFS and $60m placed by Peter Harris & others to enhance stock liquidity - $223m into thin air!

Meanwhile, the promoters, lawyers, accountants and consultants gouge themselves senseless on fees.

Something wrong with the picture here!"

[Balance]

Hasn't Peter Harris got any of this left?
"$100m raised at IPO, $63m raised to purchase SFS and $60m placed by Peter Harris & others to enhance stock liquidity - $223m into thin air!

Meanwhile, the promoters, lawyers, accountants and consultants gouge themselves senseless on fees.

Something wrong with the picture here!"

Shares sold were via a SPV - bet you the funds will be in family trusts etc etc.

Strange how Rod Petrocevic of Bridgecorp is bankrupt but lives like a king in his family trust's owned mansion and some bankrupts even live so well on income earned on rental properties owned by family trusts.

[kiora]

Trusts can be busted open though
http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=10429173

[iceman]

This is getting worse by the day. Behind paywall on NBR today, Tim Hunter reports CBL bought an industrial property close to Auckland Airport, eventually sold to a company owned by Peter Harris and CBL's deputy chairman Alistair Hutchinson. They sold it 6 months later to Synlait Milk !!
Investors sure have been had on this one. Glad I never got involved but feel for those that did.

[Balance]

This is getting worse by the day. Behind paywall on NBR today, Tim Hunter reports CBL bought an industrial property close to Auckland Airport, eventually sold to a company owned by Peter Harris and CBL's deputy chairman Alistair Hutchinson. They sold it 6 months later to Synlait Milk !!
Investors sure have been had on this one. Glad I never got involved but feel for those that did.

If they did it before IPO, that is par for the course.

If they did it after IPO, then there must be hell to pay if they make a decent profit and independent directors approved the deal.

[iceman]

If they did it before IPO, that is par for the course.

If they did it after IPO, then there must be hell to pay if they make a decent profit and independent directors approved the deal.

CBL bought before IPO and sold 13 months after IPO according to article that also says it is "an apparently undisclosed multi million dollar related party transaction"

[Balance]

CBL bought before IPO and sold 13 months after IPO according to article that also says it is "an apparently undisclosed multi million dollar related party transaction"

Looks really really bad then.

Bunch of useless independent directors on the board who seem to have allowed Harris and Hutchinson to do whatever they like?

[Balance]

https://www.nbr.co.nz/article/bank-china-impairs-33m-loan-annual-report-likely-linked-cbl-b-214285

Bank of China will be ruing this 'new' NZ customer of theirs!

Ouch!

[Balance]

https://www.nzx.com/announcements/316265

Talk about stating the freaking obvious!

What is more obvious is that NZX and FMA are but paper shuffling entities with no clue about continuous disclosure beyond the obvious.

[winner69]

https://www.nzx.com/announcements/316265

Talk about stating the freaking obvious!

What is more obvious is that NZX and FMA are but paper shuffling entities with no clue about continuous disclosure beyond the obvious.

Any more ‘offending’ they might be delisted

Mind you your mate George knows how to be a regular offender eh

[King1212]

Holly molly! My insurance with them gone baby! Lucky my builder step in with Stamford one....sorry guys...hope u all not losing so much!

[Balance]

Any more ‘offending’ they might be delisted

Mind you your mate George knows how to be a regular offender eh

Put a QC or two in front of the NZX and FMA, and watch them shake and shiver.

Schoolyard bullies - that's what the NZX and FMA are unfortunately so market better not expect any sort of regulatory comfort from them.

[BlackPeter]

Great article and analysis from John Hawkins (NZSA chair) on the CBL situation in the April issue of "The Scrip" (bi-monthly NZSA publication).

NZSA is representing the interests of retail shareholders in this fiasco.

Join them (they need all the firepower they can get) and check it out!

https://www.nzshareholders.co.nz/members.cfm

Hint - if you use the discount code "Newsletter" than your first annual subscription is only $100 ;) Don't know how long the promo goes, though, so better do it now;

[iceman]

Great article and analysis from John Hawkins (NZSA chair) on the CBL situation in the April issue of the "script" (bi-monthly NZSA publication).

NZSA is representing the interests of retail shareholders in this fiasco.

Join them (they need all the firepower they can get) and check it out!

https://www.nzshareholders.co.nz/members.cfm

Hint - if you use the discount code "Newsletter" than your first annual subscription is only $100 ;) Don't know how long the promo goes, though, so better do it now;

A good article that provides for very sobering reading ! The FMA seems to have completely failed investors in CBL

[Joshuatree]

How CBL went bust in a month
By Rakesh Tummala
Wed 21 March 2018 08:12 AM Market news

Insurance is a unique business. Premiums are priced upfront for risks (claims) that are made (or not) at some stage down the track, for uncertain amounts. There is no business where understanding and managing risk is more critical. In fact, it is the business.
The failure of New Zealand-based insurer CBL Corporation (ASX:CBL), a true riches-to-rags story, illustrates this point.
It all began well. CBL listed in October 2015 with an attractive story. The New Zealand-based and ASX-listed company was achieving strong revenue and earnings growth (largely overseas) in challenging insurance conditions.
Management and the board had industry experience and skin in the game, owning more than 50% of the company. Upon listing at $1.62 a share on 13 October 2015, the share price rose to a high of $3.76 around a year later – representing a market value of about $890m. This was one kiwi that could fly.
Cracks emerged in August 2017, but investors kept the faith. Unbeknownst to the market, though, regulators were concerned.
An extraordinary series of announcements ensued last month, revealing that the company had drastically underestimated expected claims and culminating in it being placed into voluntary administration on 26 February.
This The regulator’s report provides some juicy details but the key mistakes were in misunderstanding and mismanaging risks.
Questionable business model

Well-run insurers typically have significant resources and capabilities to assess and manage risks, especially in the areas of underwriting, pricing and claims assessments, which can be a source of competitive advantage.
CBL didn’t operate in this manner – it outsourced key insurance functions.
Such a model isn’t unheard of in the insurance industry, but the arrangement can mean that management is less informed of risks. Beyond its reliance on outsourcing, CBL acted as a reinsurer, taking a proportional share of the premiums and risks of other insurers (known as 'cedants'). Hence, the value added by CBL seems to have been limited.
CBL’s demise was down to its concentration on the French construction market, selling compulsory insurance products that protect builders from claims against shoddy work. This accounted for about 54% of premiums during 2016.
Claims for these products can take more than a decade to be settled and long periods of low claims can quickly be followed by spells of heavy losses. In essence, CBL was taking a big bet on a tricky risk.
Whilst market premiums were stagnant for years, CBL was building market share. In 2006, CBL generated NZ$1m in premiums from the French construction market. A decade later that figure had risen to NZ$130m, accounting for 3–5% of that market.
The proportion of those risks it passed on to other reinsurers also waned in recent years, meaning it wore more of the risks.
CBL’s business model and market position raise the question: how is a small insurer reliant on third parties able to grow so quickly in a mature and competitive market?
Growth hides flaws

CBL’s small size and volatile credit rating mean it was limited to attracting smaller clients. It grew via two avenues: A small (and seemingly unsophisticated) Danish insurer and a broker (eventually replaced by a CBL subsidiary). The underlying insured clients were small French building contractors.
The company was, however, still competing against large well-resourced insurers. Along with its cedants and third-parties, CBL woefully underestimated the cost of future claims and underpriced its policies. This meant that, in effect, prior recorded profits were overstated.
Management admitted as much when it announced an exit of the French construction business in February, although the regulator probably gave them little choice.
Eventually, the risks became apparent as the claims came in. The years of low apparent losses and rapid growth offered management and investors a false sense of confidence when, below the surface, large liabilities were accumulating.
Leveraged balance sheet

Misjudging claims is not infrequent in the insurance industry and can be managed with a robust balance sheet. Shareholder capital can absorb unexpected claims – but for an insurer such as CBL, underwriting concentrated and complex risks, a large buffer is warranted.
By 30 June 2017, CBL’s balance sheet was starting to look stretched. Its regulatory solvency ratio looked sound but debt had risen sharply after several acquisitions. High growth compounded the situation, making the company vulnerable to a deterioration in French construction insurance.
Despite increasing reserves in August 2017, last month CBL revealed it needed to strengthen its French construction reserves by NZ$100m. On top of that, there was a writedown of NZ$44m of overdue premium receivables.
That pushed the company into insolvency. Plans to raise capital didn’t eventuate, and CBL was placed into administration. Shareholders are unlikely to receive much after creditors get their dues.
Lessons from the fall

The nature of insurance makes it a difficult area for investors. It’s hard to assess management on its appreciation and management of risk. A track record of managing through insurance cycles, supported by the appropriate business capabilities and a robust balance sheet, certainly helps.
As for management’s skin in the game, well, that only helps if it understands the game.
In CBL’s case, it clearly didn’t. In an amusing side-note, CBL's managing director was even crowned New Zealand's entrepreneur of the year by EY last year. It all goes to show that there's no substitute for independent research. The fallout from CBL’s failure is still to be fully realised. But the lessons for investors are much clearer

[Balance]

https://www.interest.co.nz/insurance/93436/two-cbl-insurances-six-directors-claim-company-interim-liquidation-solvent-issue-be

Excerpt : "An affidavit by Peter Harris and Alistair Hutchinson was on Friday morning filed with the Auckland High Court, which according to their lawyer, Davey Salmon, claims the company is “solvent to the tune of $70 million positive”.

Life in the dog yet?

[BlackPeter]

https://www.interest.co.nz/insurance/93436/two-cbl-insurances-six-directors-claim-company-interim-liquidation-solvent-issue-be

Excerpt : "An affidavit by Peter Harris and Alistair Hutchinson was on Friday morning filed with the Auckland High Court, which according to their lawyer, Davey Salmon, claims the company is “solvent to the tune of $70 million positive”.

Life in the dog yet?

Well, if this number is real (and not just a disagreement about what a fair level of reserves would be), than putting CBL into liquidation was one of the largest clusterf*ks in NZ's history. Thanks RBNZ - we need you to destroy our companies, capital and jobs - I guess who else could do it that effective ...?

Would this mean there is still life in the dog? Not sure whether $70m are enough to rebuild a thoroughly destroyed brand. Who would want to insure his next building project through an insurance company just coming out of liquidation? If Peter Harris manages to float this ship again, than I'd personally nominate him for the entrepreneur of the year award (this time deserved ...) - but I don't hold my breath.

As well - $70 million would be something like 30 cents per share. Not a lot for a company which last traded at $3.17. Might pay the legal bills and the administrator, though - that's probably the reason they still bother to work on their report ;).

[Balance]

Well, if this number is real (and not just a disagreement about what a fair level of reserves would be), than putting CBL into liquidation was one of the largest clusterf*ks in NZ's history. Thanks RBNZ - we need you to destroy our companies, capital and jobs - I guess who else could do it that effective ...?

Would this mean there is still life in the dog? Not sure whether $70m are enough to rebuild a thoroughly destroyed brand. Who would want to insure his next building project through an insurance company just coming out of liquidation? If Peter Harris manages to float this ship again, than I'd personally nominate him for the entrepreneur of the year award (this time deserved ...) - but I don't hold my breath.

As well - $70 million would be something like 30 cents per share. Not a lot for a company which last traded at $3.17. Might pay the legal bills and the administrator, though - that's probably the reason they still bother to work on their report ;).

$70m will give the receivers and liquidators plenty of scope to challenge RBNZ, or investigate the directors - depending on which way the decision in court goes.

[BlackPeter]

$70m will give the receivers and liquidators plenty of scope to challenge RBNZ, or investigate the directors - depending on which way the decision in court goes.

The question is - what good would it do for CBL and its shareholders?

If we assume the affidavit is correct and the company was financially sound, would you expect the RBNZ to cough up the $600m+ (market cap minus residual value) they destroyed when putting a viable company into liquidation?

[iceman]

Danish insurer Alpha, the recipient of $42m of funds from CBL, declared bankrupt. This just keeps on getting uglier.

[winner69]

Danish insurer Alpha, the recipient of $42m of funds from CBL, declared bankrupt. This just keeps on getting uglier.

A lot of London cabbies left without cover ...mayhem

[stoploss]

Danish insurer Alpha, the recipient of $42m of funds from CBL, declared bankrupt. This just keeps on getting uglier.
Just what the RBNZ was trying to avoid , but they allegedly sent the funds anyway ...

[trader_jackson]

https://www.interest.co.nz/insurance/93436/two-cbl-insurances-six-directors-claim-company-interim-liquidation-solvent-issue-be

Excerpt : "An affidavit by Peter Harris and Alistair Hutchinson was on Friday morning filed with the Auckland High Court, which according to their lawyer, Davey Salmon, claims the company is “solvent to the tune of $70 million positive”.

Life in the dog yet?

Don't think so...
While the likes of PEB will live to die another day, looks like CBL won't
http://www.scoop.co.nz/stories/BU1805/S00383/update-cbl-administrators-recommend-liquidation.htm

[Marilyn Munroe]

https://www.interest.co.nz/insurance/93436/two-cbl-insurances-six-directors-claim-company-interim-liquidation-solvent-issue-be

Excerpt : "An affidavit by Peter Harris and Alistair Hutchinson was on Friday morning filed with the Auckland High Court, which according to their lawyer, Davey Salmon, claims the company is “solvent to the tune of $70 million positive”.

Life in the dog yet?

"Your honour my client rejects the prosecutions claim that as a company director he knowingly allowed it to continue trading while insolvent. His submission before an Associate Judge of the High Court in April shows his state of mind including a belief the company was solvent. If the glove does not fit you must acquit."

Boop boop de do
Marilyn

[kiora]

"Your honour my client rejects the prosecutions claim that as a company director he knowingly allowed it to continue trading while insolvent. His submission before an Associate Judge of the High Court in April shows his state of mind including a belief the company was solvent. If the glove does not fit you must acquit."

Boop boop de do
Marilyn

v.v.strange saying that when paid $45m for under writing to Alpha Insurance in Denmark that is now put into voluntary liquidation. Presumably to protect it from a CBL claim?

[Balance]

https://www.nbr.co.nz/article/serious-fraud-office-enters-cbl-fray-th-216572

[peat]

https://www.nbr.co.nz/article/serious-fraud-office-enters-cbl-fray-th-216572

sounds like NBR has the lowdown on 'the plan'.

[peat]

seems a bit stink that Wells can bail right now.

[BlackPeter]

seems a bit stink that Wells can bail right now.

Not just Wells - sounds like the worse (the word "better" would sound here inappropriate) part of the bunch went ... but hey, money gone and now they need to clear their CV to go to new ventures and destroy more share holder funds - isn't this the way the game is played?

https://www.stuff.co.nz/business/money/105475609/call-to-protect-kiwisavers-exposed-to-750-million-cbl-insurance-failure

Oh sorry - it was of course "Sir John" Wells who went ... clearly a distinguished destroyer of shareholder funds. I am sure he is as deserving of his title as his fellow board member, the distinguished knight Alistair Hutchison.

Also going:

"The internationally experienced insurance industry executive" Paul Donaldson
https://www.nbr.co.nz/article/internationally-experienced-insurance-industry-executive-joins-cbl-board-176928

and of course the experienced international financial expert Ian Kelvin Marsh.

Mark the names for your never again list ... they all provided sufficient evidence that they are incapable of looking after share holder funds.

[Dassets]

Paul Donaldson doesnt even list CBL on his linkedin profile. Just says a small portfolio of insurance assets which I assume is CBL. He looks dead right. It is small, smaller than any one thought I suppose.

[IAK]

"Sir John" Wells[/B] who went ... clearly a distinguished destroyer of shareholder funds. I am sure he is as deserving of his title as his fellow board member, the distinguished knight Alistair Hutchison.



Just confirms my view of the NZ Royal Honours system - a bad joke.

[BlackPeter]

watershed meeting further delayed:

https://www.nzx.com/announcements/321869

Obviously everything confidential (well, to the owners anyway) - only the people who use up the shareholder funds are allowed to know.

Funny feeling - the shareholders (i.e. owners) of the company have absolutely no power and they get no information about what is going on. It feels like a liquidator owners didn't chose and who is neither reporting to them nor representing their interest is playing the long game with their advocate friends and spending what's left of shareholder funds without any constraints or owners control. Why would anybody talk with the owners?

I guess the situation is at least clear proof that there are yet still shareholders funds left to spend. I am sure there will be no further delays as soon as all remaining funds will have been turned into lawyers and court fees.

How long does it take for advocates to burn whats left of $750 million dollars market cap? We shall see. Sad state of affairs.

[BlackPeter]

Not that new (from early July), but not previously published on this threat. Some info from the NZSA about Harris plans (or the lack thereof):

https://www.nzshareholders.co.nz/pdf/correspondence/Media%20Release%20July%202018%20CBL%202.pdf

[BlackPeter]

Letter from the NZSA to the Prime Minister pointing out serious failures of our market authorities and signifcant delays for stakeholders to access justice in the case of CBL and WYN. Justice delayed is justice denied. The NZSA asks the Prime Miinister for action:

https://www.nzshareholders.co.nz/pdf/correspondence/PM%20FMA%20Ltr%20110918.pdf

Not sure I hold my breath, but good on the NZSA for trying!

[BlackPeter]

Not spring fresh, but this FMA statement from July 13 is I think still relevant and has not yet been published on this thread:

https://fma.govt.nz/news-and-resources/media-releases/cbl-investigation-update/

Sounds like they do take a quite close look into CBL. Not sure, though I hold my breath that we will hear about the results anytime soon.

[peat]

Not spring fresh, but this FMA statement from July 13 is I think still relevant and has not yet been published on this thread:

https://fma.govt.nz/news-and-resources/media-releases/cbl-investigation-update/

Sounds like they do take a quite close look into CBL. Not sure, though I hold my breath that we will hear about the results anytime soon.

that update is astonishingly vague. sounds like something out of a Kafka novel.

[BlackPeter]

Watershed meeting another month delayed:

https://www.nzx.com/announcements/326339

More time for the lawyers to spend the rest of the remainng money :D;

Ah yes - and obviously - everything is so confidential that the owners are not supposed to know what's going on.

[minimoke]

I guess "There are extensive confidentiality orders in place in respect of the liquidation application, which limits the information the Administrators can provide." is reasonable if ultimately it benefits the company owners. Though I suspect they will get sweet FA once the watershed moment opens the gates of more bads news for them.. In the meantime everyone can take comfort that the liquidators are beavering away accumulating fat fes for their firm. Someone has to keep the market for exotic cars and mansions liquid.

[whatsup]

Winding up notice in the Herald today, the end is neigh !

[Brain]

Tim hunter of The NBR writes

“Evidence of serious impropriety, chronic insolvency and failure to comply with Reserve Bank directions were reasons to order the immediate liquidation of failed insurer CBL Insurance, the High Court heard”

[Brain]

If I hadn’t lost a fair bit of dosh on CBL I would find it all very funny. To tell the truth though, I do still find it all a bit of a laugh albeit a very expensive one. I was first alerted to CBL at the NZSA agm. Peter Harris did a presentation and at the time I thought he was a very unimpressive individual and looked like he was still living with his mother. As time went on CBL share price appreciated and EY named him as Entrepreneur of the year so I decided to throw a bit of cash at it. I think I should have trusted my Alley Cat instincts and stayed well clear.

The quotes that really make me laugh are

Chair of the EY judging panel said that Peter Harris was a “true master Entrepreneur”

The judging panel said that Peter Harris knew his business inside out and was very modest and had a good story to tell.

I suspect this saga will end with Mr Harris doing Jail time. I am sure the chaps at Mt Eden will take an interest in Mr Harris. He would be well advised to keep a firm grip of the soap when he’s having a shower.

[Brain]

This is equally amusing

Actuary Geoffrey Atkins, who reconstituted the company’s historical balance sheets based on analysis by actuarial firm Finity used in the RBNZ’s investigation.
Mr Atkins concluded CBL Insurance had been balance sheet-insolvent since 2013.

[Balance]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12158862

Cannot be more damning than the revelations coming out of shady dealings even while company was insolvent and additional $200m of Debts ('creditors')!

[minimoke]

I wonder what Auditors audit. Or do they just pick up fat cheques for ticking boxes?

[GTM 3442]

I wonder what Auditors audit. Or do they just pick up fat cheques for ticking boxes?

Experience tells me that most of the audit legwork is done by new graduates who will pretty much believe whatever they are told.

It would be a fascinating spectator sport to watch the liquidators try to recover the audit fees. And the various fees paid up to and after the NZX listing. Up there with tent-pegging or polo.

Or watching worms try to struggle and squirm out of cans. . .

[BlackPeter]

This is equally amusing

Actuary Geoffrey Atkins, who reconstituted the company’s historical balance sheets based on analysis by actuarial firm Finity used in the RBNZ’s investigation.
Mr Atkins concluded CBL Insurance had been balance sheet-insolvent since 2013.

Impossible. The highly self praising audit and consultancy company Deloitte concluded still in 2017 that CBL's financial statements "represent fairly" the companies financial position (as at 31 December 2016).

10148

And I guess these guys (and gals) claim to be really good - just citing from their webpage:


“Deloitte” is the brand under which tens of thousands of dedicated professionals in independent firms throughout the world collaborate to provide audit, consulting, financial advisory, risk advisory, tax and related services to select clients.

...

For us, good isn’t good enough. We aim to be the best at all that we do—to help clients realize their ambitions; to make a positive difference in society; and to maximize the success of our people. This drive fuels the commitment and humanity that run deep through our every action.


https://www2.deloitte.com/nz/en/pages/about-deloitte/articles/about-deloitte.html

Well, that's what the professionals say about themselves. Surely - not noticing the lacking of a couple of hundred million dollars would not be good enough - or would it?

Maybe time to put these guys on the never again list as well? Auditors should matter!

[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.

And it (now) seems management had been telling porkies since well before I made this post in Sep 2015 (prior to listing). And here we are, barely 3 years later and CBL, and the $700m or so, is gone.

[Balance]

And it (now) seems management had been telling porkies since well before I made this post in Sep 2015 (prior to listing). And here we are, barely 3 years later and CBL, and the $700m or so, is gone.

Well done!

[moka]

The quotes that really make me laugh are

Chair of the EY judging panel said that Peter Harris was a “true master Entrepreneur”

The judging panel said that Peter Harris knew his business inside out and was very modest and had a good story to tell.



If CBL was insolvent since 2013 Peter Harris was quite an entrepreneur to get away with running a “successful” business all those years. And he was obviously good at telling a story.

I recently read a quote by the Dalai Lama “One problem with our current society is that we have an attitude towards education as if it is there to simply make you more clever, more ingenious.”
Clever in this context means to know how to work the system for your benefit, for self-interest. It is knowing how take advantage and exploit the opportunities, where someone else pays the price. And being clever is admired even when it involves dishonesty. The crime is being caught, not being dishonest.

We need to be better at recognising conmen. Here is a Youtube video of clever conman Frank Abagnale telling his story which was the subject of the film Catch Me If You Can. He posed as a pilot when he was still a teenager and flew over a million miles for free on airlines around the world as a passenger. Interesting that he looks a bit like Peter Harris and Bernie Madoff, not how I expect a conman to look and sound. Bernie Madoff was described as a very affable pleasant person to be around and his personality was cordial, friendly, and warm, but those characteristics helped him perpetrate his crime.

https://www.youtube.com/watch?v=vsMydMDi3rI

[smartbomb]

Well, CBL did do a little bit of lasting good. A miniature version of this statue was also in the CBL boardroom in Shortland Place as well. I saw it many times when visiting from Sydney as we did business with CBL over a long time. I wonder where it is now?
http://www.stuff.co.nz/sport/rugby/rugby-world-cup/4849001/Michael-Jones-sculpture-secured-for-World-Cup

[iceman]

Quite shocking reading in the NBR behind paywall today https://www.nbr.co.nz/story/el-toro-cbl-s-mysterious-peruvian-gold-mine-deal

Reads like an episode of "Narcos" with drug trafficking, money laundering, gold mining in Peru and a missing USD 600,000 as a story line. I'm glad I was never a SH of CBL but the more one reads about the activity of this so called insurance company, the less faith one has in the monitoring of companies on the NZX. What an utter fiasco. Surely some of these guys will go to jail.

[Sideshow Bob]

Quite shocking reading in the NBR behind paywall today https://www.nbr.co.nz/story/el-toro-cbl-s-mysterious-peruvian-gold-mine-deal

Reads like an episode of "Narcos" with drug trafficking, money laundering, gold mining in Peru and a missing USD 600,000 as a story line. I'm glad I was never a SH of CBL but the more one reads about the activity of this so called insurance company, the less faith one has in the monitoring of companies on the NZX. What an utter fiasco. Surely some of these guys will go to jail.

Maybe that was all part of why Peter Harris won Entrepreneur of the Year.....?

[hardt]

The DOCA alternative to liquidation for CBLI was agreed to by Korda-mentha, banks and creditors which stood to receive surpluses under the agreement. RBNZ were the only ones opposed to the DOCA regardless of the losses to creditors, policyholders and subsequently some of us on here.

RBNZ were lobbying those parties that agreed to the DOCA to change their position.
RBNZ even offered Alpha retention of the $40m payment made to it by CBLI in February so long as Alpha agreed to change sides and support the RBNZ.

The least respected regulatory body in NZ continues to deliver :t_up:

All this being a dispute over CBL reserving:
Armour Re which now owns CBLI's largest creditor ( Elite insurance ), recently agreed to acquire CBLI's European reinsurance liabilities, agreeing with PWC's recommended reserving levels of $371.4m carried by CBLI in its balance sheet.
- the basis at which RBNZ claimed a solvent reserve level CBLI should be ( $600m OVER 50% more than PWC ) has been scoffed at by one of the most experience acquirers of reinsurance run-off portfolios in Europe.

[whatsup]

The DOCA alternative to liquidation for CBLI was agreed to by Korda-mentha, banks and creditors which stood to receive surpluses under the agreement. RBNZ were the only ones opposed to the DOCA regardless of the losses to creditors, policyholders and subsequently some of us on here.

RBNZ were lobbying those parties that agreed to the DOCA to change their position.
RBNZ even offered Alpha retention of the $40m payment made to it by CBLI in February so long as Alpha agreed to change sides and support the RBNZ.

The least respected regulatory body in NZ continues to deliver :t_up:

hardt where did you find this gem ?

[BlackPeter]

The DOCA alternative to liquidation for CBLI was agreed to by Korda-mentha, banks and creditors which stood to receive surpluses under the agreement. RBNZ were the only ones opposed to the DOCA regardless of the losses to creditors, policyholders and subsequently some of us on here.

RBNZ were lobbying those parties that agreed to the DOCA to change their position.
RBNZ even offered Alpha retention of the $40m payment made to it by CBLI in February so long as Alpha agreed to change sides and support the RBNZ.

The least respected regulatory body in NZ continues to deliver :t_up:

Hmm - yes, this is what Peter Harris seems to claim. Question is - can he be trusted? I heard from some other (in my view trustworthy) source close to the action a different version of the story.

[hardt]

Hmm - yes, this is what Peter Harris seems to claim. Question is - can he be trusted? I heard from some other (in my view trustworthy) source close to the action a different version of the story.

I have written off CBL investment comfortably without an ounce of stress, the destroying of a profitable business by an over reaching regulatory body stresses me out more than anything and a story will soon be public for you all to make up your mind.

The strengthening did not affect the $500m in cash reserves CBLC's.
RBNZ completed a 'without notice" application to liquidate CBLI as the 10yr reserve strengthening was underway.
RBNZ gave CBL & PWC 7 days to respond to the actuarial report from RBNZ's chosen auditor which took over 6 months to DRAFT and 5 days in decided no more time was to be permitted for a response.

17/02 - RBNZ advised CBL & PWC they had 7 days to respond to the draft report

21/02 - RBNZ determined CBL "is not yet required to prepare a recovery plan" ( a prescribed process under s 138 of NZ IPSA insurance regulations designed to get insurers back on its feet )
- Despite the fact CBL had already announced the reserve strengthening recommended by PWC

23/02 - Despite the previous assurances, RBNZ advised CLBI they had 3.5 hours to appoint a voluntary liquidator and, if not, RBNZ would immediately file an application for a winding up order and at the same time apply to the court for a liquidator to be appointed.

I cannot wait for RBNZ to get dragged through the coals over this... or most likely an internal investigation coming to a quiet ending.

RBNZ made claims in court which were contradicted by PWC/KPMG/DELOITTE.
RBNZ say and pay what they need to, to validate their actions.

Anonymous Survey of 200 large NZ Businesses:

50% claimed RBNZ does not have sufficient understanding of the realities of their industry

50% of businesses claimed their interaction with RBNZ was not-constructive

71.43% of businesses claimed RBNZ is not readily held to account for the quality of their work ( including mistakes being made )

[whatsup]

The DOCA alternative to liquidation for CBLI was agreed to by Korda-mentha, banks and creditors which stood to receive surpluses under the agreement. RBNZ were the only ones opposed to the DOCA regardless of the losses to creditors, policyholders and subsequently some of us on here.

RBNZ were lobbying those parties that agreed to the DOCA to change their position.
RBNZ even offered Alpha retention of the $40m payment made to it by CBLI in February so long as Alpha agreed to change sides and support the RBNZ.

The least respected regulatory body in NZ continues to deliver :t_up:

All this being a dispute over CBL reserving:
Armour Re which now owns CBLI's largest creditor ( Elite insurance ), recently agreed to acquire CBLI's European reinsurance liabilities, agreeing with PWC's recommended reserving levels of $371.4m carried by CBLI in its balance sheet.
- the basis at which RBNZ claimed a solvent reserve level CBLI should be ( $600m OVER 50% more than PWC ) has been scoffed at by one of the most experience acquirers of reinsurance run-off portfolios in Europe.

DOCA is what ?

[BlackPeter]

I have written off CBL investment comfortably without an ounce of stress, the destroying of a profitable business by an over reaching regulatory body stresses me out more than anything and a story will soon be public for you all to make up your mind.

The strengthening did not affect the $500m in cash reserves CBLC's.
RBNZ completed a 'without notice" application to liquidate CBLI as the 10yr reserve strengthening was underway.
RBNZ gave CBL & PWC 7 days to respond to the actuarial report from RBNZ's chosen auditor which took over 6 months to DRAFT and 5 days in decided no more time was to be permitted for a response.

17/02 - RBNZ advised CBL & PWC they had 7 days to respond to the draft report

21/02 - RBNZ determined CBL "is not yet required to prepare a recovery plan" ( a prescribed process under s 138 of NZ IPSA insurance regulations designed to get insurers back on its feet )
- Despite the fact CBL had already announced the reserve strengthening recommended by PWC

23/02 - Despite the previous assurances, RBNZ advised CLBI they had 3.5 hours to appoint a voluntary liquidator and, if not, RBNZ would immediately file an application for a winding up order and at the same time apply to the court for a liquidator to be appointed.



I heard this story as well. Not sure, though whether it is true - as indicated - there is another side to it, and not all pieces of info I heard are compatible.

But whatever it is - the whole process was shocking and the oversight of NZ authorities clearly lacking. Yes, a proper and independant investigation into the saga would be essential to help NZ capital markets to regain some credibility.

[Joshuatree]

Voluntary Administration Watershed Meeting 2 pages 89.2KB (https://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=02078784)

I make it Liquidation used 9 times = $9 million in fees?
Watershed(moment) used 10 times =$10 million in fees to KM? Justified and sanctified.

The way it is

[IAK]

CBL Corporation, once worth $750 million, put into liquidation.

http://www.stuff.co.nz/business/112674846/cbl-corporation-once-worth-750-million-put-into-liquidation?cid=app-android

[Brain]

Worth reading



https://www.nzshareholders.co.nz/pdf/correspondence/CBL%20Saga%20media.pdf

[macduffy]

Worth reading



https://www.nzshareholders.co.nz/pdf/correspondence/CBL%20Saga%20media.pdf

All power to the NZSA's efforts but personally I gave up long ago on any chance of recovering anything from my small holding.

[BlackPeter]

All power to the NZSA's efforts but personally I gave up long ago on any chance of recovering anything from my small holding.

I guess no matter whether there is anything salvageable for shareholders - much more important is that the story is fully investigated, that anybody who broke the law gets their day in court and that the public sees that our financial regulations get enforced.

We need to fully understand why it was ok that the board did breach its continuous disclosure agreements, we need to understand why it was ok that the company traded (as some say) for years (or even since listing) while insolvent and we need to understand why the RBNZ thought it ok to be complice in these things through not allowing disclosure.

It also would be interesting to know why it was ok to keep everything after going into "voluntary" administration from the owners of the company ... while lawyers representing who knows whom (but the owners) kept working for who knows whom but no doubt consuming many millions of the shareholder funds.

So far it feels like we learned nothing from the collapse of the finance companies. I hope this does not end up as another example where inept or fraudulent individuals destroy hundreds of millions and receive at worst a slap with a wet bus ticket. Happens too often in New Zealand without consequences - this can't be good for investor confidence into the national financial markets.

[SilverBack]

I guess no matter whether there is anything salvageable for shareholders - much more important is that the story is fully investigated, that anybody who broke the law gets their day in court and that the public sees that our financial regulations get enforced.

We need to fully understand why it was ok that the board did breach its continuous disclosure agreements, we need to understand why it was ok that the company traded (as some say) for years (or even since listing) while insolvent and we need to understand why the RBNZ thought it ok to be complice in these things through not allowing disclosure.

It also would be interesting to know why it was ok to keep everything after going into "voluntary" administration from the owners of the company ... while lawyers representing who knows whom (but the owners) kept working for who knows whom but no doubt consuming many millions of the shareholder funds.

So far it feels like we learned nothing from the collapse of the finance companies. I hope this does not end up as another example where inept or fraudulent individuals destroy hundreds of millions and receive at worst a slap with a wet bus ticket. Happens too often in New Zealand without consequences - this can't be good for investor confidence into the national financial markets.

Well BP, there is quite a number of individuals who were guests of Her Majesty after the 2008+ fiascos in the finance industry and there have been a few since. Others have been banned from business. The really smart ones knew how far they could go without incurring criminal charges and made sure they lived overseas. I receive FMA notices and I find that they are active and do bring action.

[BlackPeter]

Well BP, there is quite a number of individuals who were guests of Her Majesty after the 2008+ fiascos in the finance industry and there have been a few since. Others have been banned from business. The really smart ones knew how far they could go without incurring criminal charges and made sure they lived overseas. I receive FMA notices and I find that they are active and do bring action.

Quite a number? How many do you remember who have been convicted and served time?

[macduffy]

So far it feels like we learned nothing from the collapse of the finance companies.

I don't think the two situations bear much comparison, BP. There's a lot of difference between the property lending excesses of the finance companies and the risks underwritten by an insurance company, particularly one involved in such a specialised business as performance bonds and guarantees. The pricing and accounting for such instruments can't be compared to the valuation process involved in financing property developments.

Personally, I should have known better than to have a small flutter on this one.

:(

[BlackPeter]

I don't think the two situations bear much comparison, BP. There's a lot of difference between the property lending excesses of the finance companies and the risks underwritten by an insurance company, particularly one involved in such a specialised business as performance bonds and guarantees. The pricing and accounting for such instruments can't be compared to the valuation process involved in financing property developments.

Personally, I should have known better than to have a small flutter on this one.

:(

Absolutely - different skill sets on board and management level required. However - while the CBL disaster still needs to be investigated, I can see a number of quite obvious parallels:


Boards with lack of (for the relevant business) relevant experience and skills;
Boards which find it for one reason or another ok to ignore their disclosure requirements;
Auditors confirming healthy balance sheets despite company being insolvent - i.e. at least some of our audit companies seem to be incompetent and not adding value;
Market regulators responsible for overseeing governance either incompetent, not aware of their role or firmly sleeping at the helm.



Nothing changed. We (as country and system) don't seem to have learned the lessons from the GFC.

[Brain]

On the 5th of April 2017 which is a bit over 2 years ago Peter Harris and Alistair Hutchinson sold 5M and 5.4 M shares respectively and senior management sold another 9.6 M shares at $3.26.
This was to increase market Liquidity. A noble gesture indeed.

[BlackPeter]

Advert from Peter Harris with a lot of good questions in the weekend edition of the NZ Herald. I think - no matter how we see his contributions in this saga - his questions do deserve an answer.

RBNZ is clearly not coming out of this smelling like roses - and they well might have destroyed lots of clients and shareholder funds without being accountable to anybody.

10651

[Lola]

Advert from Peter Harris with a lot of good questions in the weekend edition of the NZ Herald. I think - no matter how we see his contributions in this saga - his questions do deserve an answer.

RBNZ is clearly not coming out of this smelling like roses - and they well might have destroyed lots of clients and shareholder funds without being accountable to anybody.

10651

Not the first time arms of government have destroyed businesses and those responsible are faceless clerks , and as you say accountable to no one. The kiwifruit/ MPI saga is a case in point. There are others in the pipeline right now. The fresh faced little Hipkins idea of chucking all the state servants wollies into one big convenient bucket wont achieve a thing. As for his current attempts to merge the poltitechnics under one roof....a crazy idea. Lets the good ones carry on, and those that have been useless, well close them down. Soviet style central government is on its way to a neighbourhood near you.

[Balance]

Advert from Peter Harris with a lot of good questions in the weekend edition of the NZ Herald. I think - no matter how we see his contributions in this saga - his questions do deserve an answer.

RBNZ is clearly not coming out of this smelling like roses - and they well might have destroyed lots of clients and shareholder funds without being accountable to anybody.

10651

Being people of considerable means, Peter Harris & Alistair Hutchinson simply need to file for a judicial review and RBNZ would be required to answer those 'questions'.

There is only one question which these two characters need to answer via their PR firm and we can all then evaluate if there is substance to their 'we are clean' campaign :

Q - Why did they transfer $55m against RBNZ's regulatory order? What other transfers (and how much) were they getting ready to make if the RBNZ did not act proactively to stop them from doing so?

Until they answer that question, they have ZERO credibility.

[whatsup]

On the 5th of April 2017 which is a bit over 2 years ago Peter Harris and Alistair Hutchinson sold 5M and 5.4 M shares respectively and senior management sold another 9.6 M shares at $3.26.
This was to increase market Liquidity. A noble gesture indeed.

THANK YOU Brian.

[BlackPeter]

Being people of considerable means, Peter Harris & Alistair Hutchinson simply need to file for a judicial review and RBNZ would be required to answer those 'questions'.

There is only one question which these two characters need to answer via their PR firm and we can all then evaluate if there is substance to their 'we are clean' campaign :

Q - Why did they transfer $55m against RBNZ's regulatory order? What other transfers (and how much) were they getting ready to make if the RBNZ did not act proactively to stop them from doing so?

Until they answer that question, they have ZERO credibility.

I can't comment on their credibility - just said that they are asking good questions.

Lets not forget that the RBNZ is holding the authority but seems to have no accountability to anybody. It would not be the first time that our banking and insurance oversight is badly failing. Chris Lee released recently an interesting book "The Billion Dollar Bonfire" describing the SCF story. Another sad tale where one wonders which role our regulatory authorities play ... other than keeping their eyes firmly closed unless they see a financial train wreck. If they do, than they pounce and make sure that the site of the accident gets nuked to (financially) destroy everybody involved and to maximise the damage to all stakeholders.

[Balance]

I can't comment on their credibility - just said that they are asking good questions.

Lets not forget that the RBNZ is holding the authority but seems to have no accountability to anybody. It would not be the first time that our banking and insurance oversight is badly failing. Chris Lee released recently an interesting book "The Billion Dollar Bonfire" describing the SCF story. Another sad tale where one wonders which role our regulatory authorities play ... other than keeping their eyes firmly closed unless they see a financial train wreck. If they do, than they pounce and make sure that the site of the accident gets nuked to (financially) destroy everybody involved and to maximise the damage to all stakeholders.

Good questions which they can require the RBNZ to answer with a judicial review.

Why have they not done so but spend money on PR?

Answer is obvious.

[Balance]

I can't comment on their credibility - just said that they are asking good questions.

Lets not forget that the RBNZ is holding the authority but seems to have no accountability to anybody. It would not be the first time that our banking and insurance oversight is badly failing. Chris Lee released recently an interesting book "The Billion Dollar Bonfire" describing the SCF story. Another sad tale where one wonders which role our regulatory authorities play ... other than keeping their eyes firmly closed unless they see a financial train wreck. If they do, than they pounce and make sure that the site of the accident gets nuked to (financially) destroy everybody involved and to maximise the damage to all stakeholders.

http://www.stuff.co.nz/business/money/2161440/Advice-and-adversity

Enuf said about Chris Lee - the man who had his own finance companies rating system and who thought Allan Hubbard walked on water.